PSALM to seek universal charge adjustment

The Power Sector Assets and Liabilities Management Corp. (PSALM) will seek adjustments for the so- called universal charge on account of its budget defi cit as it continues to trim the debts of the National Power Corp. (Napocor).

The universal charge is a line item in electricity bills that is charged to all electricity consumers.

Given the agency’s budget shortfall, PSALM president Emmanuel Ledesma Jr. said they need to make adjustments in the universal charge through a true- up mechanism. This move is intended to correct the universal charge in a given year if there is a deficiency or excess in the current charge, depending on PSALM’s financial position.

“PSALM shall file the annual true-up adjustments for both universal charge for stranded contract costs and universal charge for stranded debt. But, we have yet to determine the figures upon approval of PSALM 2014 financial statements,” Ledesma said.

This is allowed under the guidelines approved by the Energy Regulatory Commission (ERC), the power regulator, Ledesma noted.

PSALM has been able to reduce the debts of Napocor to P698.9 billion as of the end of 2014 from P1.2 trillion from end-December 2000 or after thirteen years since the passage of the Electric Power Industry Reform Act of 2001, the power reform law mandating the privatization of Napocor’s assets.

Broken down, the figure consists of the principal amount of P830.7 billion as of 2000, and interest amounting to P373 billion.

“PSALM has reduced the principal by 30 percent to P582.2 billion and likewise decreased the interest payable by 69 percent. The remaining interest until the debt maturity still amounts to about P116.7 billion,” Ledesma said in a report on PSALM’s privatization proceeds.

However, Ledesma said PSALM estimates a funding shortfall of P227.4 billion on the back of its P698.9-billion outstanding financial obligations and P471.5- billion privatization receivables. This is because PSALM has yet to fully collect the proceeds from privatization.

As of end-2014, PSALM’s privatization program generated a total P916.2 billion.

Of the total privatization proceeds, P420.1 billion has been paid to PSALM while P471.5 billion remains to be collected. The balance of P24.6-billion accounts for the reduction due to foreign exchange fluctuations and contractual adjustments.