1105 billion ERC sets stricter scrutiny of filings for universal charge
Escalates to
The universal charge (UC) recovery petitions of Power Sector Assets and Liabilities Management Corporation (PSALM) already escalated from R28 billion to a humongous level of R105 billion, hence, the Energy Regulatory Commission (ERC) has guaranteed that it will do rigid financial evaluation of the applications because of the cost impact these will have on Filipino consumers.
ERC Chairman Jose Vicente B. Salazar told Manila Bulletin that while they will be prioritizing these UC cost recovery filings, “it should be emphasized that there is a need for meticulous study of these applications as these are proposals for pass-on charges.”
The ERC chief has given word that the regulatory body will be the ultimate sleuth when it comes to scrutinizing all the submitted data and supporting information that shall justify these cost recoveries.
“While we will be acting on these matters with dispatch, the proposed pass-on will have to be evaluated on the basis of reasonableness and affordability to protect consumers who will ultimately be bearing these costs,” he stressed.
Nevertheless, Salazar assured that they would balance regulatory strictness with the needs also of PSALM on the cost recoveries so it can meet maturing financial obligations. “The ERC will be prioritizing these applications, mindful of their importance and urgency,” he reiterated.
PSALM Officer-in-Charge Lourdes S. Alzona confirmed that they have already calibrated the UC filings both for stranded contract costs (SCC) and stranded debts (SD). That is from the R27.7 billion filing for UC-SD that is currently pending for decision of the ERC.
She said R35 billion had been applied for as cost recovery for stranded contract costs, with true-up adjustments from years 2011 to 2015. Additionally, the petition for UC-stranded debts had already risen to R70 billion, inclusive of the pending R28 billion.
Alzona noted the equivalent cost recovery for the UC-SCC will be R0.03 per kWh over four years; and R0.06 per kWh for the UC on stranded debts.
She similarly qualified that the UC cost recovery applications, when approved, will cut down the level of the power sector’s stranded liabilities currently estimated at R245 billion until the end of PSALM’s corporate life in 2026.
Salazar indicated in a separate press statement that “we will fully support any DOE (Department of Energy) initiative aimed at reducing electricity rates and will implement national government policies consistent with our mandate to set the rates and protect the interest of the consumers.”
He emphasized that they are “closely scrutinizing” the PSALM filings, “and will still have to undergo due process before (the ERC) can finally render its decision on the case.”