ERC orders halt to collection of universal charge in electric bills

By Myrna M. Velasco

By shelving the mooted applications of state-run Power Sector Assets and Liabilities Management Corporation (PSALM), the Energy Regulatory Commission (ERC) has ordered the stoppage of collections of universal charges (UCs) amounting to P0.2536 per kilowatt hour (kWh) that are being passed on as separate line items in the consumers’ electric bills.

Agnes T. Devanadera ERC Chairperson Agnes T. Devanadera

ERC Chairperson Agnes T. Devanadera announced that “with the dismissal of the subject PSALM petitions, electricity consumers will no longer be charged with additional P0.2536 per kWh which is supposed to be added to their electricity bills.”

The ERC decision, she further noted, effectively operationalized the mandate of the Murang Kuryente Act or Republic Act 11371 which targets to wipe out the UC charges in the consumers’ power bills.

Prior to the ERC order, PSALM has eight petitions for more than P90 billion worth of pending cost recoveries of universal charges for stranded debts (SD) and stranded contract costs (SCCs), which should have bloated charges to consumers by up to P0.80 per kWh if fully passed on.

The MKA-anchored rate reduction will effectively be covered by a subsidy provision through the utilization of P208 billion worth of the Malampaya fund that had been remitted to the State coffers through the years.

With MKA’s implementation, the industry regulator similarly directed PSALM that it “shall not file with the ERC any new petition for UC-SCC and SD until the said allocated P208 billion amount is exhausted and no other allocations are made by Congress.”

Devanadera further stated “had the ERC been hasty in approving the eight PSALM petitions, consumers may have suffered another rate increase.”

As previously noted by PSALM, since the Malampaya fund is just now a book entry in government’s coffers, this has to be replenished with borrowings – which the MKA lawmaker-framers are just amenable to, even if this entails new round of liabilities that will eventually be recovered also from the Filipino consumers either through new round of rate hikes or increased taxes. Their only priority is just to bring down the rates for consumers at this time.

And with the regulatory body’s ruling, the ERC chief noted that the consumers are now assured that they can enjoy near-term financial relief in their electricity bills.

“The consuming public is the most vulnerable stakeholder in the electric power industry, and we at the ERC, are duty-bound to protect them from unnecessary and unjustified increase in electricity rates,” Devanadera stressed.

Until end-2019, PSALM already collected P79.71 billion worth of UCs for stranded contract costs; and P5.8 billion worth of UCs for stranded debts through the monthly bills that are being dispatched to Filipino ratepayers.

The UC-SCC accounts for cost recoveries that can’t be recouped from the market for the contracted independent power producers of state-owned National Power Corporation (NPC) that were subsequently transferred to PSALM; while UC-SD covers cost recoveries that cannot be fully settled by the privatization proceeds of the NPC assets.

These two UC items in the rates have been prescribed among the cost recoveries that shall be passed on to consumers via the mandate of the Electric Power Industry Reform Act, or the holy grail of the power industry’s restructuring paradigm.