Business World - - Opinion - BIENVENIDO S. OPLAS, JR. BIENVENIDO S. OPLAS, JR. is the pres­i­dent of Min­i­mal Gov­ern­ment Thinkers. min­i­mal­go­v­ern­ment @gmail.com

PSALM is sit­ting on and ad­min­is­ter­ing a huge pile of cash from us elec­tric­ity con­sumers. Some prob­lems and is­sues that I see here.

We have the 2nd or 3rd most ex­pen­sive elec­tric­ity in Asia (af­ter Ja­pan and Hong Kong or Sin­ga­pore) mainly be­cause there are many charges that are im­posed on our monthly elec­tric­ity bill. The big­gest item is the gen­er­a­tion charge (goes to power gen­er­a­tion plants) plus eight other items: trans­mis­sion charge, dis­tri­bu­tion charge, sup­ply charge, me­ter­ing charge, sys­tem loss charge, uni­ver­sal charge, feedin-tar­iff al­lowance (FIT-All), VAT and other taxes.

This col­umn has dis­cussed many times the FIT-All or guar­an­teed high price for re­new­ables for 20 years, also com­pe­ti­tion in power gen­er­a­tion that are re­flected in WESM prices, the trans­mis­sion charge, sys­tem loss charge, oth­ers.

I get in­trigued by the uni­ver­sal charge (UC) be­cause it con­tains four items (UC-ME, UC-EC, UCSCC, UC-SD) that seem for­ever. UC is pro­vided in the EPIRA law of 2001, Sec­tion 34, to be paid by all elec­tric­ity con­sumers na­tion­wide.

The UC fund ad­min­is­tra­tor col­lected by the dis­tri­bu­tion util­i­ties, elec­tric co­op­er­a­tives and other elec­tric­ity sup­pli­ers is the Power Sec­tor As­sets and Li­a­bil­i­ties Man­age­ment Corp. (PSALM). It has three func­tions un­der the EPIRA law: (a) pri­va­tize NPC gen­er­a­tion and Transco trans­mis­sion as­sets, (b) man­age li­a­bil­i­ties of NPC debts, obli­ga­tions of elec­tric coops to NEA and other agen­cies, and (c) ad­min­is­ter the col­lec­tion and dis­burse­ment of UC funds.

Be­low are the cur­rent UC rates, UC re­mit­tances re­ceived by PSALM un­til Septem­ber 2018, and its pe­ti­tion to avail huge funds.

What are these four com­po­nents?

1. SCC — ex­cess of the con­tracted cost of elec­tric­ity by the Na­tional Power Corp. (NPC) over the ac­tual sell­ing price of the con­tracted en­ergy out­put.

2. SD — fi­nan­cial obli­ga­tions of NPC which have not been liq­ui­dated by the pro­ceeds from the sales and pri­va­ti­za­tion of NPC as­sets.

3. ME – sub­sidy for steady sup­ply of elec­tric­ity in small is­land prov­inces and far-flung ar­eas.

4. EC — for wa­ter­shed re­ha­bil­i­ta­tion and man­age­ment.

So PSALM is sit­ting on and ad­min­is­ter­ing a huge pile of cash from us elec­tric­ity con­sumers. Some prob­lems and is­sues that I see here.

One, those old SCCs and now SDs, these were con­tracted since the early 90s dur­ing the power cri­sis and con­sumers have been pay­ing for them. Af­ter about 27 years they are still there? The UC rates do not even de­cline through time and we have to keep pay­ing for them for­ever? Wow, very lousy.

Two, the ME sub­sidy for small is­land prov­inces and far away ar­eas, they are for­ever too? Why can’t they have their own baseload, 24/7 power plants (coal, hy­dro, geo­ther­mal, etc.) and just aug­ment with big gensets run­ning on diesel dur­ing peak hours, so that the ME sub­sidy can be elim­i­nated?

There is a moral haz­ards prob­lem by NPC-SPUG (small power util­ity group) here. The agency might dis­like that those ar­eas will have their own baseload plants be­cause that will ul­ti­mately elim­i­nate their agency, their jobs and perks. Even then, those ex­ist­ing NPC gensets are not enough so those is­lands suf­fer reg­u­lar brownouts, which ad­versely af­fect their tourism, com­mer­cial and in­dus­trial busi­nesses.

Three, PSALM is a gen­er­a­tion player, it man­ages and op­er­ates NPC plants that are not yet pri­va­tized and joins the com­pe­ti­tion for power sup­ply. It can “sell low” at a loss, then raid the UC funds to re­cover its losses and ap­pear to be fi­nan­cially healthy.

This cre­ates a moral haz­ards prob­lem too. PSALM will have lit­tle in­cen­tives to has­ten the pri­va­ti­za­tion of the re­main­ing NPC plants. It can be­come a for­ever bu­reau­cracy funded by for­ever UC sub­si­dies. PSALM be­comes an­other anti-com­pe­ti­tion fac­tor in the Philip­pine elec­tric­ity mar­ket.

To have cheaper elec­tric­ity, we should do away with all sub­si­dies as much as pos­si­ble. Power plants that sell ex­pen­sive elec­tric­ity, whether con­ven­tional or re­new­able, base load or peak load, let them sink. Re­move UC, re­move FIT-All, over the long-term. Con­sumers in­ter­est of cheaper, sta­ble elec­tric­ity should be paramount over all other busi­ness, bu­reau­cracy and tax­a­tion in­ter­ests.


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