11 Nov 2011
The Power Sector Assets and Liabilities Management (PSALM) Corporation has not committed to the House Committee on Energy that it will withdraw its applications with the Energy Regulatory Commission for the recovery of the stranded financial obligations of the National Power Corporation (NPC) through the Universal Charge (UC).
PSALM President and Chief Executive Officer Emmanuel R. Ledesma Jr. made the clarification in response to the published statements of Trade Union Congress Party Representative Democrito Mendoza that PSALM should answer whether it will withdraw these petitions as allegedly committed to Congress.
"What PSALM said was that it will extensively study the implications of the proposal by some lawmakers to withdraw the UC petitions for the recovery of the stranded debts (SD) and stranded contract costs (SCC) of NPC," Ledesma pointed out.
"PSALM filed the applications to recover the UC-SD and UC-SCC as mandated under the Electric Power Industry Reform Act (EPIRA). The PSALM Board, before making its decision on this issue, will have to seek guidance from the Joint Congressional Power Committee (JCPC) in the implementation of the EPIRA since the JCPC monitors and ensures proper implementation of the EPIRA," Ledesma said.
Ledesma also made it clear that the total amount of SD and SCC to be recovered for a period of 15 years is PhP139 billion and not USD15.8 billion as claimed by Rep. Mendoza. PSALM's computation stringently adhered to the amended guidelines provided by the ERC for the purpose, Ledesma said.
PSALM further clarified that the contract set to expire in December 2011 is the Transition Supply Contract (TSC) with Manila Electric Co. (Meralco), and not the Independent Power Producer Administration contracts as alleged. The discounted rates granted to the economic zones, being customers of Meralco, are under the said TSC; hence, the special rates will also end at the expiration of the contract term.
"Given our mandate to liquidate existing government obligations, it is no longer a sound management decision for PSALM to renew the Meralco TSC and continue to subsidize the economic zones at the discounted rates previously granted to them by NPC. PSALM will incur operational losses in the event of such renewal since the remaining PSALM-owned power plants in Luzon have high operating costs of generating power. PSALM's existing capacity may not even be sufficient to supply the economic zones' power requirements as most of the plants in Luzon have already been privatized," Ledesma stated.
"We are trying to avoid incurring further operational losses in order to prevent additional debts to be incurred by PSALM as this will result in a higher Universal Charge," Ledesma concluded.
Strategic Communications and Partnership Division |