The adoption of the PBR system means lower costs and more efficient operations for the electric distributors by June 01, 2003, Angara said, of his proposal.
The proposed scheme will result in a lower stranded cost shouldered by electric end users and by the National Power Corp. This amount will be limited to only P0.23 to end-users, as against the PPA charge, which is almost equal to charges for actual electric consumption, hence doubling the electric expenditures paid by consumers.
What happens, Angara said, is that there will be cost sharing between Napocor and the public and the government should take a bigger hit for the inefficient and onerous IPP contract it has entered into throughout the years.
Napocor’s stranded costs in the previous months had reached P1.22 per kilowatt hour, but the Angara recommendation will mean the PPA will go down by P0.99 per kilowatt hour.
The scheme also allows distribution utilities to charge stranded costs to end-users as part of the universal charge, but only for a maximum amount of P0.23 per kilowatt hour.
Angara continued that distribution utilities shall be required to refinance their stranded costs and recover the cost of refinancing from the universal charge. In all cases, he added, a defined cap of P0.23 per kilowatt hour shall be imposed for the recovery of stranded contract cost and refinancing costs by a distribution utility. This will result in a P1.20 per kilowatt hour in the PPA of Meralco alone.
The plan lays down important reforms in the power industry which were not addressed by the Electric Power Industry Reform Act (EPIRA) or Republic Act 9136. And Angara claims that the alternative solution recommends a better mode of setting electric rates for distribtion utilities, one that is performance-based and promotes efficiency. The formula is also used in the United Kingdom, Australia, Argentina and in the United States. — Biznews