MANILA -- The Senate has approved on second reading a bill seeking to reduce electricity rates by using the Malampaya fund to pay the stranded debts and stranded contract costs of the National Power Corp. (NPC).
Senate Bill No. 1950, otherwise known as "Murang Kuryente Act", was approved on second reading with some amendments.
One major amendment, as proposed by Senator Ralph Recto, is the use of the Malampaya fund collection for the missionary electrification charge, environmental charge of the NPC, and the feed-in-tariff allowance.
Recto, main author of the bill, said the national government’s net share from the Malampaya Natural Gas Project, amounting to PHP204 billion, can be tapped to settle NPC's stranded costs and debts assumed by the Power Sector Assets and Liabilities Management Corp.
The Electric Power Industry Reform Act (EPIRA) defines stranded contract costs of NPC as the “excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of such contracts in the market.”
The stranded cost is passed on to consumers as part of the universal charges in electricity billings.
The same law also defines stranded debts of NPC as "any unpaid financial obligations of NPC, which have not been liquidated by the proceeds from the sales and privatization of NPC assets." (PNA)