Rejection of power rate hike temporary

POSTSCRIPT By Federico D. Pascual Jr. 

(The Philippine Star) Updated November 18, 2010 12:00 AM 

WHO MUST PAY?: Eastern Samar Rep. Ben Evardone is right. Why should we captive electricity consumers be made to suffer and pay for the mismanagement and anomalies in the National Power Corp.?

It was a good thing the Energy Regulatory Commission has seen the wisdom of rejecting the petitions of the Power Sector Assets and Liabilities Management (PSALM) seeking power rate increases totaling P2.25 per kilowatt-hour to pay off Napocor debts and losses.

We consumers are not responsible for those gargantuan debts arising mostly from mismanagement. We were not consulted before the extraordinary obligations were contracted. So why should we pay for them?

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HOLIDAY RESPITE: Through the Electric Power Industry Reform Act of 2001, PSALM was formed to sell Napocor assets and pay off Napocor’s debt.

But the law also allowed the government (meaning us taxpayers) to absorb Napocor’s outstanding obligations that cannot be covered by the sale or privatization of assets and the billing revenues.

Note that the disapproval of the rate increase may be hanging on a slim thread. Explaining its rejection, ERC director Francis Saturnino Juan said PSALM failed to submit the pertinent documents and its revenue (www.philstar.com) statements.

Is this then just a Christmas reprieve — granted in the same spirit as a court’s temporary restraining order? If after the holidays, PSALM submits the needed paper work, will its petition for rate increase then be on its way to approval?

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UNIVERSAL CHARGE: The regulatory commission dismissed last Nov. 15 four petitions of PSALM to impose universal charge for 25 years to recover Napocor’s “stranded debts” and “stranded contract costs.”

Stranded debts are its financial obligations still not paid from the proceeds of the sale of assets. Stranded contract costs, on the other hand, refer to the contract costs of electricity from Independent Power Producers that are higher than the actual selling price.
The ERC also observed that the calculation of stranded contract costs included fuel costs, the recovery of which is governed by a separate mechanism.
Juan said that in the PSALM petition for the recovery of stranded debts, there were some inconsistencies in the calculation of the proceeds from the sale of Napocor generation plants. That, however, could be corrected in a subsequent petition.
“Although recovery of Napocor stranded debts and stranded contract costs is recognized and sanctioned by law,” he said, “the ERC is bound to vary the reasonable amounts that will be allowed for recovery through the universal charge.”

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