State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is seeking P8 billion budget from the national government that it can funnel as subsidy for rate reduction next year to approximately 22.5 million electricity consumers nationwide.
PSALM President Irene Besido-Garcia said the allocation will cover the universal charges on stranded contract costs (SCC) and stranded debts (SD) that had already been terminated by the Energy Regulatory Commission (ERC) for pass-on in the electric bills of all Filipino consumers.
The cessation of collection of these two line items in the electric bills had been anchored on the prescription of Republic Act 11371 or the Murang Kuryente Act (MKA) that was passed in August 2019.
The budget for the electricity cost reduction or subsidy shall come from the Malampaya fund – and the total allocation for this shall be up to P208 billion as set forth under the law.
But since the Malampaya fund itself is merely treated as a book entry, the national government will need to cover allotments for the "Murang Kuryente" subsidy via the General Appropriations Act.
According to PSALM, the P8.0 billion "Murang Kuryente" budget for 2021 will cover the cost shortfall that the company cannot fully shoulder from its collections of stranded contract costs; as well as on the portion of stranded debts that cannot be plugged by proceeds from its privatization activities.
The universal charges (UCs) in the bills, which the Filipino consumers are being freed from paying for, amount to P0.2536 per kilowatt hour (kWh). The halt-collection order was issued by the ERC in June this year.
“Instead of passing on these SCC and SD to electricity consumers through the UC, the amount from the Malampaya fund as provided in the Murang Kuryente Act and its IRR (implementing rules and regulations), will be allocated yearly to PSALM and be utilized to liquidate the SCC and SD,” the state-run company said.
Based on Department of Energy (DOE) data, the total number of household consumers who will benefit from the power rate reduction would be as much as 20.484 million next year; while for commercial end-users, it will be 1.458 million subscribers; industrial customers would hover at 77,700; while other types of customers would be 476,752.
Prior to the ERC decision bringing to an end the pass-on of the UC-SCC and UC-SD charges to consumers, PSALM had several pending applications with the regulatory body targeting multi-year recovery of P95 billion worth of such universal charges via the electric bills. These petitions that were filed from 2015 to 2019 were effectively dismissed in the ruling rendered by the industry regulator.
Throughout the remaining corporate life cycle of PSALM or until 2026, it was calculated by the Murang Kuryente Act authors led by Senate Committee on Energy Chairman Sherwin T. Gatchalian, that the total cost-reduction or savings benefits of Filipino consumers could reach a scale of P0.971 per kWh.
On its previous UC applications with the ERC, the state-owned firm qualified that the dismissal “was not because there are no valid SCC and SD, but rather, because the Murang Kuryente Act was already passed into law before the ERC was able to act on PSALM’s petitions.”