Power rates may rise 39¢/kwh due to universal charge bids

MANILA, Philippines - Electricity rates nationwide may rise by 39 centavos per kilowatt-hour (kwh) in the next four years starting next year as universal charge (UC) petitions will likely be approved by regulators.

State-run Power Sector Assets and Liabilities Management Corp. (PSALM) is looking to stretch the UC collection to as much as 25 years to lower the add-on rates to P0.065 to P0.07 per kwh, an official said.

“We are hoping the UC will be approved. We heard rumors that it will be approved as early as January next year,” PSALM president and CEO Emmanuel Ledesma, Jr. told reporters.

Ledesma said PSALM expects the Energy Regulatory Commission (ERC) to approve in full the additional electricity charge.

PSALM wants to charge P0.0313 per kwh and P0.3666 per kwh to collect funds for stranded debts and stranded contract costs, respectively. The petitions were filed with the ERC in June 2011.

“However, I think it is also crucial that the extension of (the corporate life of) PSALM gets approved because that will change the whole equation,” Ledesma said.

Specifically, Ledesma said the P0.39 per kwh additional charge to be collected in the next four years can turn into P0.065 to P0.07 per kwh if collected in the next 15 years or P0.09 per kwh to be added to power bills for 25 years.

Under Senate Bill 3250, PSALM is seeking a 10-year extention of its corporate life to year 2036 instead of 2026.

Ledesma said it will lessen the burden of the additional rates. “It would be nice because we are trying to mitigate the impact to the consumers,” Ledesma said.

PSALM expects a P20-25 billion revenue per year if it starts collecting P0.39 per kwh.

The longer collection period of 15 years at P0.09 per kwh will add P5 billion per year to PSALM’s coffers.

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

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, of which $5.477 billion was used to settle its maturing obligations.