Senators seek use of 1207-B Malampaya Fund to help consumers save electricity costs

Senators are now actively pushing for the passage of a measure that would allow the use of the government’s net income from the Malampaya natural gas project to help defray the electricity costs of power consumers who are already reeling from inflationary shocks and skyrocketing prices of basic goods and services.

Sen. Sherwin Gatchalian on Sunday renewed his push for the passage of Senate President Pro Tempore Ralph Recto’s Senate Bill No. 1950 or the “Murang Kuryente Act” which seeks to allocate billions of the Malampaya Fund to pay off the stranded contract costs and stranded debt of the National Power Corporation (Napocor) which are passed on to Filipino consumers and

reflected as universal charge in their monthly electricity bill.

Gatchalian, chair of the Senate Committee on Energy, noted that the fund — which was set aside for the exploration, development, and exploitation of energy resources — remained largely unused since 2001.

The measure specifically proposes to minimize — if not completely eliminate — the universal charges by using the 1207-billion Malampaya Fund to pay off the stranded contract costs and stranded debts incurred by the Power Sector Assets and Liabilities Management Corp. or PSALM.

“If passed into law, this bill would lower electricity rates and provide significant consumer savings for Filipinos,” Gatchalian said in his sponsorship speech of the measure recently.

Recto, in his co-sponsorship speech last week, said his bill “would allow the use of the government’s net Malampaya income in paying for the stranded contract costs and debts assumed by PSALM” as mandated under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 or the EPIRA law.

“To recall, when the state’s power assets were privatized, all liabilities were transferred to one holding entity – the PSALM. The idea was to clean the books of assets for disposal, so that when unburdened of obligations, it would be easier to auction off,” Recto said.

“On paper, the stranded costs and debts left behind would be covered by proceeds of power plants and other assets sold. But the fine print states that any difference will be shouldered by the consumers,” the senator lamented.

“This explains why our electricity bill contains that seemingly innocuous item called Universal Charges (UC). It is where these stranded costs are lumped together with other unitemized payables. UC amortizes past mistakes. Because like any business, power democratizes debt, but privatizes profit,” he explained.

Recto said it is estimated that these orphaned debts assumed by PSALM, would hit 1566.2 billion by 2026, when PSALM’s corporate life will end.

“While energy officials and the gas field's driller have assured us that a combination of measures will stretch Malampaya's life to 2029, what is clear is that it will be downhill beginning 2024,” he said.

“…But in the meantime, we should use Malampaya to ease the burden of households,” Recto stressed.

Based on the Senate energy panel’s assessment, power consumers shelled out 30.1938 per kilowatt-hour from January 2013 to May 2017 to pay for Napocor debts through the universal charge. In June 2017, Filipino household started paying 30.2203 per kilowatt.

Unless the bill becomes a law, Gatchalian warned that Filipino households may have to suffer even more pass-on-charges as PSALM’s cash flow projection shows the necessity of collecting an accumulated universal charge of 30.5593 per kilowatt hour from the year 2020 to 2026.

Once approved, Gatchalian said this may translate to a savings of 1109.34 per month and 11,312.08 per year, for a household consuming 200 kilowatt hours per month.