Power rate hike looms
State-owned Power Sector Assets and Liabilities Management Corp. (PSALM) said that consumers may have to brace for R0.28 per kilowatt hour (kWh) hike in their electric bills due to the estimated R245-billion residual liabilities of the restructured power sector.
The rate increase impact will be passed on to consumers through the universal charge (UC), separate line items in the monthly power bills. The cost recovery has been calculated throughout the remaining nine-and-a-half years duration of PSALM’s existence.
PSALM Officer-in-Charge Lourdes S. Alzona said in an interview that under best case scenario, the amalgamated stranded debts (SD) and stranded contract costs (SCC) by 2026 will be at R245 billion level, inclusive of its unapproved filings with the Energy Regulatory Commission (ERC).
PSALM is the government-sanctioned entity that shall manage the residual liabilities of the electricity sector, following privatization of the National Power Corp.’s assets. Its corporate longevity is for 25 years or until 2026.
Alzona qualified that the mandate given by both Energy Secretary Alfonso G. Cusi and Finance Secretary Carlos G. Dominguez III will be for the company to zero out the estimated residual debts so consumers will no longer be burdened with rate hikes.
Despite recurrent hurdles, PSALM still looks at rose-colored glass scenario in wiping out the debt level. Alzona indicated they are now identifying various asset divestment strategies and other measures that could reinforce cash flow into PSALM’s coffers.
“The direction given to us is to have zero liabilities by the end of PSALM’s corporate life, so we’ve already identified several items that could bring down the debt level,” she stressed.
The PSALM executive emphasized that they will initially focus on the collection of power receivables ranging from R1.5 billion to R5.0 billion – excluding yet the claims it has been demanding on the independent power producer administrator (IPPA) deal for the 1,200-megawatt Ilijan natural gas fired power facility.
“We have power receivables that we’ve restructured, and then we have overdue accounts with other customers… these are mostly electric cooperatives,” Alzona qualified.
The state-run firm will also be pursuing divestments of non-power assets, including prime real estate properties.
And on the continuing privatization of power facilities and capacity contracts, she emphasized that they have been scouring for ways on how to maximize proceeds.
Department of Energy Spokesperson Wimpy Fuentebella noted in a briefing with media that they are “studying all options how to lower the universal charge being passed on to consumers.”
By trimming down the UC component in power rates, he reckoned that “this is one of the mechanisms the DOE is considering to lower the price of electricity.”
This administration is promising to come up with “a win-win solution to all affected stakeholders,” especially the consumers who are already getting exasperated at prospects of burdening additional costs from a privatization process that actually guaranteed them benefits, more than distressing rate hikes.