Senate OKs bill tapping Malampaya fund to stave off power hikes

The Senate approved on second reading Monday a bill which will use a portion of the Malampaya collection to defray a looming hike in electricity prices caused by stranded power sector privatization costs, which will be passed on to consumers.

The measure, principally authored by Senator Ralph Recto and sponsored by Senator Win Gatchalian, taps a part of an estimated unspent P204 billion in government royalties from the Malampaya natural gas production to settle P244 billion in Power Sector Assets and Liabilities Management Corporation (PSALM) debts that will start to mature in 2019.

When the government sold off assets from the previous National Power Corp. state monopoly, it was left with outstanding liabilities which were not included in the sale.

The said obligations were assumed by PSALM, which then passed these on to consumers through a Universal Charge, Recto explained.

"This explains why our electricity bill contains that seemingly innocuous item called Universal Charges or UC. It is where these stranded costs are lumped together with other unitemized payables," Recto said.

Recto said this orphaned debt-- mga naiwang utang-- assumed by PSALM, will hit P566.2 billion by 2026, the year PSALM's corporate life will end.

By the end of 2031, PSALM's outstanding obligation is forecast to further rise to P595.6 billion as PSALM is expected to borrow to service payables.

Recto said PSALM's debts can be settled the old way: by passing it on to consumers, which will have to pay an additional 86 centavos per kilowatt-hour once the pending petitions for the Stranded Debts and Stranded Contract Costs are approved.

"Or there is the painless way: by using the Malampaya fund to wipe the slate clean," Recto said.

Based on the fund's January 2019 unspent balance of P231.9 billion, some P56.13 billion will be used as replacement of the UC which is scheduled to be shouldered by consumers.

Recto said his bill complies with Presidential Decree 910, and the Supreme Court ruling on the matter "because the proceeds will be plowed back to an activity which is related to energy."