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OSG finds policy gap in use of P208-B Malampaya fund for power rate subsidy

By Myrna M. Velasco

The Office of the Solicitor General (OSG) caught sight of a policy infirmity that may not solidly allow the use of P208 billion Malampaya fund to subsidize the snipping of universal charge (UC) collections under the Murang Kuryente Act.

In an opinion issued by Solicitor General Jose C. Calida, it was stipulated that “the use of the Malampaya fund for the payment of universal charges, currently being collected is merely permissible, not mandatory.”

The OSG anchored that argument on the provision of the Murang Kuryente Act (MKA) which states that “the universal charge for stranded contract costs and stranded debts currently being collected may be covered by the allocated amount from the Malampaya fund subject to the implementing rules and regulations of (the) Act.”

The OSG pointed out that the use of the word “may” in the law turns out to be a weak precept, because that does not entail mandatory use of the fund for the MKA power rate reduction that has been calculated at P0.971 per kilowatt hour.

As further emphasized by the OSG, “the phrase ‘may’ be covered by the allocated amount from the Malampaya fund should not be construed to mean ‘shall’ or ‘must’…instead, it should be interpreted on its ordinary sense as permissive or discretionary on the part of the respondents, whether or not to allot a portion of the Malampaya fund to cover for universal charges currently collected by PSALM (Power Sector Assets and Liabilities Management Corporation).”

PSALM is the entity sanctioned under the Electric Power Industry Reform Act (EPIRA) to administer the pass-on and collection of universal charges from all Filipino electricity ratepayers. For the UCs propounded to be subsidized by the Malampaya fund, such shall only cover the UCs for stranded debts and stranded contract costs.

Despite the ruling rendered by the OSG, Laban Konsyumer Inc. President Victorio Mario Dimagiba, who has been batting for immediate implementation of the MKA power rate reduction, is leaning on the wisdom of the Energy Regulatory Commission (ERC) to act with dispatch on the pleaded stoppage of collection of the UCs for stranded debts and stranded contract costs.

“Hopefully, the ERC decides the case in favor of the consumers,” Dimagiba stressed, as he has been batting for the implementation of the MKA rate cuts since January this year.

And on the opinion of the OSG that “there is no firm timeline when the consumers shall enjoy the benefit of the Murang Kuryente Act, Dimagiba noted that if the ERC concurs to that tenet, then “a good law turns into a bad law.”

PSALM previously indicated that it will tap fresh borrowings this year – and part of that shall replenish the Malampaya fund which will then be subsequently used for allocation in the MKA rate reduction.

The collection of universal charges last year inched up by P20.097 billion – bringing the total UC collections since the start of its implementation to P188.296 billion.

The aggregate collection for UC stranded contract costs amounted to P3.357 billion from January to December last year; while UC-stranded debts collection summed up to P3.139 billion.


Source: Manila Bulletin (https://business.mb.com.ph/2020/06/24/osg-finds-policy-gap-in-use-of-p208-b-malampaya-fund-for-power-rate-subsidy/)

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