August 12, 2018 | 9:06 pm
POWER Sector Assets and Liabilities
Management Corp. (PSALM) will continue billing San Miguel Corp. (SMC) based on
their independent power producer administrator (IPPA) contract, until a court
strikes down its billing method.
”We are not changing that until such
time that there is a final decision by a court of law that says, ‘you are
wrong;’ we will not change our position,” Irene Joy B. Garcia, PSALM president
and chief executive officer, told reporters.
“It’s based on the contract, the
formula provided for in the contract,” she said.
Ms. Garcia was responding to an announcement
last month by SMC President and Chief Operating Officer Ramon S. Ang that he
was willing to pay the P22.39 billion being billed by PSALM, but the company
would in turn bill the agency around P162 billion.
Their dispute stemmed from the IPPA
contract entered into by PSALM and SMC unit South Premier Power Corp. (SPPC)
over the 1,200-megawatt Ilijan combined-cycle power plant in Batangas City.
Mr. Ang questioned PSALM’s position
that the plant’s output should be sold to the spot market when power prices
spike, then revert to the set price in a power supply agreement when prices
fall. Their differing positions resulted in a dispute over the accumulated
billings.
SPPC earlier filed a complaint
against PSALM for willful breach of contract from a flawed interpretation of
certain provisions of the IPPA agreement. The case also sought to stop PSALM
from illegally terminating the Ilijan IPPA and treating SPPC as an
administrator in default.
The court enjoined PSALM from
proceeding with the termination of the Ilijan IPPA agreement with SPPC while
the case is pending. SPPC said PSALM’s “willful breach of contract” was the
result of a flawed interpretation of certain provisions related to its power
generation payments under the agreement.
Ms. Garcia said that although there
is a court injunction against the agency, what it is doing ahead of a final
judgment is to go on “sending our billings in accordance with the legal
position of PSALM in the case.”
“So when we bill them we send it in
accordance with our interpretation because there is no judgment that’s final so
even if they assert a certain interpretation of the formula, we continue to
assert our own interpretation or our formula as stated in the agreement,” she
said.
“What happens is when we bill them
it’s based on our legal position, when they pay us it’s based difference
there,” she added.
Over the weekend, Mr. Ang said in a
statement: “Let me just make it clear once again that our contract is based on
a binding concession agreement and a formula approved by the Energy Regulatory
Commission. Ilijan is a base-load power plant. Its output should not be traded
in the WESM (Wholesale Electricity Spot Market) to protect power consumers.”
“PSALM is asserting a formula that
will expose the power users to WESM’s volatility,” he said as questioned whose
interest the agency is protecting “because obviously they are not making
reliable power affordable and accessible to consumers.”
“We will wait and let the court
decide,” he added. — Victor V. Saulon
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