EC debts swell to P30B

Manila Bulletin 
By Myrna M. Velasco 
Published: July 15, 2013 
Debts of electric cooperatives (EC) from power suppliers and service providers have swelled to a whopping over P30 billion as of end May this year that if left unaddressed could plunge the entire restructured power industry into dismal financial state.
Energy Secretary Carlos Jericho Petilla told reporters that he has instructed the Power Sector Assets and Liabilities Management Corporation (PSALM) to cut off the power supply of all ECs or other distribution utilities (DUs) which cannot bring to the table any arrangement for payments with their power providers.
He said the brownouts due to supply cut-off will cover five percent of consumers in the entire country and it will be “scattered in various areas nationwide.”
“What is the solution? Simple – you have to cut-off their electricity supply. Why the debts swelled? Because the past PSALM president (Jose Ibazeta) tolerated it,” Petilla stressed.
He added the non-payment of supply sourced from the state-owned power generation assets somehow “bred a mentality wherein the ECs believed they don’t need to pay their obligations with suppliers because they will still have electricity even if they will not pay.”
PSALM president Emmanuel R. Ledesma Jr, disclosed the total debts of the ECs with the state-run power utility already hovered at P20.06 billion, with the biggest owed by Lanao del Sur Electric Cooperative Inc. (LASURECO) at P6.081 billion.
That was on top of the P6.668 billion outstanding obligations of the private distribution utilities (DUs) with PSALM.
Petilla opined an iron hand is needed for such dreaded utility behavior to change and that the ECs must realize that if they will not pay for supply being delivered to them “the naturally-occurring consequence will be supply cut-off”, which will then set off brownouts for the consumers they serve.
The private power generators similarly bared earlier that the total debts of ECs for supply sourced via the Wholesale Electricity Spot Market (WESM) as well as from bilateral contracts already hit a staggering P4.88 billion.
Electric coops also incurred P7 billion in total outstanding loans with the National Electrification Administration (NEA).
“These (P7 billion) are term loans. For PSALM-NPC and private generators, that must have included current accounts which are still due at the end of the month,” NEA Administrator Edita S. Bueno has qualified.
For PSALM, it is worth monitoring how it will enforce the mandated supply cut-off or how it can strike acceptable payment arrangements with the ECs, because its failure to do so may eventually compel government to pass them on as universal charges to be borne by all electricity consumers.   source