PSALM: Proper computation necessary for consumer refund

04 Sep 2012

The Power Sector Assets and Liabilities Management (PSALM) Corporation recognizes the finality of the decision of the Energy Regulatory Commission (ERC) dated 10 March 2010 finding that there was double charging in transmission line costs for Transition Supply Contract (TSC) quantities from the start of the Wholesale Electricity Spot Market (WESM) Luzon commercial operation in June 2006. However, PSALM's position is that the computation for the refund should be based on actual segregated line rentals and not merely on an outright refund or discount of the 2.98% transmission loss recovery factor charged in the Time-of-Use (TOU) rate of the National Power Corporation (NPC) as proposed by the Manila Electric Company (Meralco).

According to PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr., "the alleged double charging arose out of the simultaneous implementation of the NPC-Meralco TSC and the price determination methodology (PDM) in WESM, both of which are ERC approved. PSALM continues to be bound by the TSC and the PDM as both remain valid until today. PSALM cannot deviate from either until an effective segregation mechanism from PEMC is approved by the ERC."

"The PhP9.1 billion that PSALM allegedly overcharged Meralco's customers cited in a news report is unfounded and, at best, premature considering that the final amount is yet to be determined after the ERC approves the implementation of a refund/collection scheme upon compliance of the parties with the directives of the regulatory body," Ledesma explained.

In the same decision, the ERC ruled that "the Philippine Electricity Market Corporation (PEMC), within three (3) months from receipt of the decision, will provide the NPC and PSALM the required segregated line rental amounts for TSC quantities, including the actual line losses embedded in said line rental amounts, from the start of WESM operations up to the most current billing month."

The decision also directed NPC/PSALM, in coordination with Meralco and other direct WESM members with TSCs, "to implement the adjustment mechanism provided in the NPC-Meralco TSC by determining the appropriate line loss charge that should have been charged the TSC quantities from the start of WESM operations up to the most current billing month and refund/collect the difference to/from affected market participants (direct WESM members) which have energy contracts with NPC, net of the corresponding line loss amounts that have been flowed back through the Net Supplement Surplus."

Moreover, NPC was also directed within six months from receipt of PEMC's inputs "to file its refund/collection scheme before the Commission for approval."

PEMC has likewise been instructed "to bill the line rental amounts to NPC for TSC quantities for the adjustment of transmission line loss cost pursuant to the TSC with Meralco and other direct WESM members."

To date, the parties have not yet fully complied with the ERC directives.

In response to PEMC's earlier Comment that "the segregation of line rentals into transmission loss and congestion cost since the start of the commercial operations of the WESM would entail reconstruction of hourly data for the last five years and would cause considerable strain in its resources," the ERC directed Meralco to submit, within five days from receipt of the ERC directive, its computation of the double charging of line losses on a per month basis from 26 June 2006 up to the present with supporting invoices.

Meralco submitted its Compliance with the ERC directive on 06 July 2012, consisting of: 1) Summary of TSC Line Loss Computation and Breakdown of TSC Per SGC (July 2006 to May 2012); and 2) Supporting invoices/official receipts covering the period July 2006 to May 2012.

"PSALM is currently reviewing and evaluating the voluminous documents submitted by Meralco in its Compliance to ensure the accuracy of the computation of the refund/collection of line rental adjustments to consumers. PSALM will proceed with the refund as soon as all the parties faithfully comply with the ERC directives in its decision dated 10 March 2010," Ledesma concluded.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067