For Luzon And Visayas Grids PSALM Seeks Fuel, Forex Adjustments

30 June 2012

Electricity consumers in Luzon will be shouldering additional P0.1059 per kilowatt hour (kWh) in their power bills if the Energy Regulatory Commission (ERC) will approve the application of the Power Sector Assets and Liabilities Management Corporation (PSALM) for adjustments in its fuel and purchased power as well as foreign exchange-related (forex) costs.

Visayas end-users, on the other, are bound to experience P0.1157 per kWh cost adjustment in the same true-up recovery scheme sought by the state-run firm. Mindanao consumers will be better placed with a proposed cost reduction of P0.0258 per kWh.

As stated on PSALM's filing, it is seeking to recoup up to P2.814

billion for Luzon grid's true-up for fuel and purchased power (TAFPPC) and foreign exchange rate-related costs(TAFxA) covering the periods from March 2010 to February 2011.

For Visayas, the total cost recovery will be P2.203 billion; while a refund of P858.196 million will be extended to Mindanao consumers.

PSALM noted that "it seeks the Commission's approval for the recovery/refund of true-up adjustment" for the specified billing period.

The stretch of recovery will be over five-year period. Public hearings have been scheduled by ERC on various dates in all three affected grids.

PSALM has emphasized that if it be allowed to pass-on to consumers such cost adjustments, it will "improve its financial standing, allowing it to efficiently comply with its mandate to liquidate all NPC (National Power Corporation) obligations and stranded contract costs in an optimal manner."

The fuel cost adjustments were calculated from those supplied to various power plants in Luzon, Visayas and Mindanao, such as the Bauang diesel power plant; Ilijan combined cycle gas facility; Cebu diesel and thermal plants, Power Barges 101, 102 and 103; Iligan diesel power plant, Power Barge 104; Southern Philippines Power and Western Mindanao Power facilities.

The applicant-firm added that "for power plants which were privatized or transferred to a local government unit (LGU) within the March 210 to February 2011 billing period, only the allowable fuel and purchased power costs prior to privatization or turnover were included in the calculations."

These facilities will include the Ilijan power plant which was privatized over the period; and the Bauang and Iligan diesel power plants which were forfeited by LGUs due to some issues, such as tax arrears. (MMV)