PSALM seeks approval for power rate hike

If the Power Sector Assets and Liabilities Management Corporation's petition is approved the universal charge for stranded contract costs will increase by P0.1274 per kilowatt/hour over a two years. PSALM president Emmanuel Ledesma Jr. said the agency has filed a petition for the increase with the Energy Regulatory Commission to recover Napocor's stranded contract costs covering the years 2011 and 2012 amounting to P17.685 billion., The Electric Power Industry Reform Act of 2001 defines stranded contract costs as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market. "With a disapproval, PSALM will continue to incur additional cost to cover its finances. Approval may avoid or temper any new debt during the recovery period," Ledesma explained. PSALM, in its petition said the provisional approval of the stranded contract costs will also keep the agency from resorting to refinancing to service maturing loan obligations thus reducing, if not totally eliminating, additional borrowing costs. Ledesma said the new filing is part of PSALM's ,variance analysis report ,"which shall serve as the basis of any under recovery in to this year's level of stranded contract cost and the zero stranded debt approved by ERC." The ERC early this year approved PSALM's petition to recover the stranded contract costs of Napocor from 2007 to 2010. ERC allowed PSALM to recover P53.851 billion at a rate of P0.1938 per kilowatt/hour. — DVM, GMA News