Low-income households are set to receive larger and more predictable electricity discounts after the Energy Regulatory Commission (ERC) formalized the flow of subsidy funds through a centralized trust mechanism.

The regulator said Friday it has ordered state-run Power Sector Assets and Liabilities Management Corp. (PSALM) and all electricity collection agents to execute a trust agreement that will govern the collection, remittance, and disbursement of the National Lifeline Subsidy Fund to lock in how subsidies are funded and delivered nationwide.

PSALM as LSF administrator

“The Resolution likewise designates PSALM as the Administrator of the LSF to ensure the effective and transparent implementation of the Lifeline Subsidy Program,” the ERC advisory read.

A key change is the inclusion of all retail rate components in calculating lifeline discounts, expanding the subsidy base and likely resulting in higher bill reductions for qualified users.

The ERC said operationalizing a uniform lifeline subsidy system, funded by a P0.01 per kilowatt-hour charge applied across all electricity consumers, with the pooled collections, will provide a more reliable stream of support for marginalized households.

Redistribution effect underscored

However, the system also underscores a redistribution effect, with non-qualifying consumers, including middle-income households, contributing to the subsidy pool through the universal charge even as benefits are concentrated on the poorest users.