PSALM will no longer seek add'l universal charge to consumers with Murang Kuryente Law

The Power Sector Assets and Liabilities Management Corp. (PSALM) on Wednesday said it will not need to impose additional universal charge as the Malampaya fund can now be tapped to reduce the stranded liabilities of the power sector being passed on to power consumers under the Murang Kuryente Law.

"The Malampaya funds will cover PSALM’s shortfalls on a yearly basis and it will not have to seek additional universal charge impositions on electricity consumers," PSALM president and CEO Irene Besido-Garcia said in a statement.

"PSALM believes this law will unburden power customers from paying additional universal charge for stranded contract costs and stranded debt that could possibly amount to P0.86 per kilowatt-hour," Garcia said.

Shouldered by consumers, the universal charge is an item on the electricity bill that covers the National Power Corp.’s (NPC) stranded debt (SD) and stranded contract costs (SCC).

The Electric Power Industry Reform Act (EPIRA) mandates the PSALM to administer the collection of the universal charge, collected every month by the distribution utilities from all electric consumers.

President Rodrigo Duterte has signed on August 8 the Republic Act 11371. 

Under this measure, P208 billion from the net government share of the Malampaya funds will be allocated to pay for the SCC and SD of the NPC that are being passed on to consumers.

The SCC is for the payment of the excess of the contracted cost of electricity under NPC’s eligible contracts with Independent Power Producers (IPP) over the actual selling price of the contracted energy output of such contracts in the market.

The SD, on the other hand, is for the payment of any unpaid NPC financial obligations that have not been liquidated by the proceeds from the sales and privatization of NPC assets.

Under the Murang Kuryente Law, the Department of Budget and Management (DBM) will provide a timely release of the amounts allocated and appropriated to the PSALM in accordance with its debt and independent power producer payment schedule.

“RA 11371 will effectively lower electricity rates. It will also save PSALM from incurring additional borrowing costs in order to settle the maturing NPC obligations,” Garcia said.

Once implemented, the utilization of Malampaya to pay for SCC and SD will translate to a P172 worth of savings for a household consuming an average of 200 kilowatts per hour every month or about P2,064 of savings per year.

“This is a meaningful and viable step towards the significant reduction of PSALM’s financial obligations unburdening the ordinary consumer from paying stranded costs in the future,” Garcia said.

The PSALM also thanked the members of the Senate Committee on Energy led by Senator Sherwin Gatchalian and the members of the House of Representatives Committee on Energy led by Representative Lord Allan Velasco for prioritizing the welfare of electricity consumers through the passage of the legislation.

The EPIRA created the PSALM, a wholly-owned and -controlled government corporation, to take over the ownership of all existing generation assets of the NPC, IPP contracts, real estate, and all other disposable assets including the transmission business of the National Transmission Corp. —KBK, GMA News