PSALM not withdrawing power rate hike proposal

MANILA, Philippines - State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is not withdrawing its application for increases in electricity rates despite options for alternate sources for debt payments, its top official said yesterday.

The company will continue to seek the approval of the universal charge (UC) petitions despite the exploration of the option to use the Malampaya funds as an alternative source for paying its financial obligations, PSALM president and chief executive Emmanuel R. Ledesma Jr. said.

PSALM is still seeking the approval of the Energy Regulatory Commission (ERC) of the full amount of the UC for stranded debts and stranded contract costs.

PSALM wants to charge P0.03 per kilowatt-hour and P4.88 per kwh to collect funds for stranded debts and stranded contract costs, respectively.

The petitions were filed last June.

The latest UC filing to recover total stranded debts and stranded contract costs amounting to P139 billion is lower than the P518 billion previously filed with the ERC in 2009 and 2010.

The UC will help PSALM “in paying off a significant portion of its stranded obligations and, consequently, lessening its dependence on foreign borrowings.”

“We see the UC as a viable tool that will strengthen PSALM’s resolve to reduce its deficit as mandated in the Electric Power Industry Reform Act,” Ledesma said.

PSALM is looking at sourcing funds for debt payment from the Malampaya natural gas project in Palawan.

Debts of the state-owned firm is estimated at $18 billion, of which around $8.7 billion are obligations to independent power producers (IPP) and roughly $7 billion are debts of the National Power Corp.

Ledesma said PSALM has generated around $10.21 billion through the sale of the power and transmission assets and the transfer of IPP contracts to IPP administrators.

Of this amount, PSALM has so far collected $5.472 billion, the bulk of which was used to settle its maturing obligations.

“PSALM has yet to collect $9.99 billion in additional proceeds from the transfer of IPP contracts to private administrators as of September 2011,” Ledesma said.

“PSALM is also in the process of expediting the collection of $2.81-billion remaining payment for the concession of the country’s sole transmission business,” he added.

PSALM, formed by the 2001 Electric Power Industry Reform Act, is the state firm in charge of privatizing government power assets as well as managing Napocor’s power plants and debt.