Definition of Stranded Contract Costs
- Stranded Contract Costs refer to the excess contracted cost of electricity under NPC’s eligible contracts with Independent Power Producers (IPPs) over the actual market selling price.
- These contracts must have been approved by the Energy Regulatory Board (ERB) as of December 31, 2000.
Definition of Stranded Debts
- Stranded Debts refer to NPC's unpaid financial obligations not covered or liquidated by asset sales and privatization proceeds.
Verification and Recovery Period
- The ERC, under IRR Rule 17, verifies claims petitioned by the Power Sector Assets and Liabilities Management (PSALM) Corporation.
- The recovery period for Stranded Contract Costs and Stranded Debts shall be no less than fifteen (15) years and no longer than twenty-five (25) years.
Non-Bypassable Nature of the Universal Charge
- The UC is a non-bypassable charge, collected from all end-users including self-generating entities.
- However, self-generating facilities registered with ERC and PSALM are exempt from the UC for the first four (4) years of its imposition.
Special Trust Fund for Universal Charge Proceeds
- PSALM is mandated to establish a Special Trust Fund for the UC proceeds.
- Disbursements from this fund must be for specified purposes, utilizing open and transparent procedures as per ERC guidelines.
Previous ERC Resolution and Amendments
- ERC Resolution No. 4, s. 2007 initially adopted rules for the recovery of NPC’s SCC and SD portions of the UC.
- Proposed amendments were published for public comments in November 2010, with submissions received from key stakeholders such as MERALCO and PSALM.
Adoption and Effectivity of Amended Rules
- The ERC approved and adopted the amended rules on February 7, 2011.
- The amended rules took effect fifteen (15) days after publication in a newspaper of general circulation.
- Copies of the resolution were distributed to relevant government agencies and all entities involved in power generation, transmission, distribution, and supply.