The Senate approved on second reading a bill reducing electricity rates by allocating the net national government share from the Malampaya natural gas project for the payment of the stranded contract costs and stranded debts of the National Power Corporation (Napocor).
Senate Bill 1950 taps a part of an estimated unspent P204 billion in government royalties from the Malampaya natural gas production to settle P244 billion in Power Sector Assets and Liabilities Management Corporation (PSALM) debts that will start to mature in 2019.
Senator Ralph Recto, principal author of the bill, said when the government sold off assets from the previous National Power Corp. state monopoly, it was left with outstanding liabilities which were not included in the sale.
He said the said obligations were assumed by PSALM, which then passed these on to consumers through a Universal Charge.
“This explains why our electricity bill contains that seemingly innocuous item called Universal Charges or UC. It is where these stranded costs are lumped together with other unitemized payables,” Recto said.
He said by the end of 2031, PSALM’s outstanding obligation is forecast to further rise to P595.6 billion as PSALM is expected to borrow to service payables.
He said PSALM’s debts can be settled either by passing it on to consumers, which will have to pay an additional 86 centavos per kilowatt-hour once the pending petitions for the Stranded Debts and Stranded Contract Costs are approved or using the Malampaya fund.
“There is the painless way: by using the Malampaya fund to wipe the slate clean,” Recto said.
He said based on Malampaya fund’s January 2019 unspent balance of P231.9 billion, some P56.13 billion will be used as replacement of the UC which is scheduled to be shouldered by consumers.
Recto said the bill complies with Presidential Decree 910, and the Supreme Court ruling on the matter “because the proceeds will be plowed back to an activity which is related to energy.”
Senator Sherwin Gatchalian, sponsor of the bill, said tapping the existing and future collections of the Malampaya Fund solely for the payment of the stranded contract costs and stranded debts would result in savings of P169.48 per month and P2,033.76 per year, which would be enough for a household to buy an extra sack of rice.
Under the bill, the “net national government share from the Malampaya Fund shall be remitted to a special trust fund to be administered by PSALM; provided that the amounts herein allocated shall be included in the General Appropriations Act (GAA).”
The Department of Budget and Management (DBM) shall provide a timely release of the amounts allocated and appropriated to the PSALM in accordance with its debt and independent power producer payment schedule.
“When the stranded contract costs, stranded debts and anticipated shortfalls in the court of the payment of such liabilities are fully paid before the termination of the corporate life of the PSALM, the net national government share shall be utilized for the payment of the missionary electrification charge, environmental charge and feed-in tariff allowance; provided that any and all excess in the fund shall accrue back to the special fund used to finance energy resource development and exploitation programs created under PD 910,” the bill stated. —LDF, GMA News