Two of the largest electric cooperative (EC) groups in the country said on Wednesday that the Power Sector Assets and Liabilities Management Corp or PSALM “must be made to explain its ballooning debts” that have a direct bearing on renewed proposals to hike electricity prices.
In a hearing before the Senate Energy Committee last Tuesday, PSALM revealed that the debts of the National Power Corporation (Napocor) assumed by PSALM currently amount to P450 billion, with another P34 billion in interest.
These debts are reflected in the stranded costs (SC) that appear in every electricity bill. A proposal by Senator Ralph Recto aims to tap the P204 billion Malampaya Fund to reduce the SC.
According to Presley De Jesus, President of the Philippine Rural Electric Cooperatives Association, the Joint Congressional Power Committee (JCPC) must take a “closer look into the books” of PSALM to determine how the body utilizes the funds it earns.
“We demand a no-nonsense examination of PSALM’s fund utilization in light of its statements before the Senate. In particular, how does PSALM manage funds from the sale of power sector assets? Were their expenditures in accordance with the Electric Power Industry Reform Act? Did the proceeds from the sale of these assets really used, as prescribed by EPIRA?”
During their appearance at the Senate, PSALM officials passed the blame on the Energy Regulatory Commission (ERC) because of the regulatory agency’s “slow pace” in approving petitions for rate increases, currently pegged at 86 centavos per kilowatt hour, and another 20-centavo “cost of delay staggered recovery” attributable to ERC’s supposed inaction.
“Pointing fingers at the ERC is a virtual admission that PSALM depends on the payment of consumers to pay its loans and debts. That should not be the case.”
“PSALM says the reason their debts and payables have increased exponentially is because of the ERC. PSALM could be resorting to pointing fingers to hide itself from complicity. Although the ERC may be partly remiss, that’s only one of the reasons. It’s not purely the ERC’s fault,” De Jesus stressed.
Sergio Dagooc, President of the National Association of General Managers of Electric Cooperatives (NAGMEC), on the other hand, offered a view from the electric cooperatives’ management perspective.
The NAGMEC head explained that the bulk of PSALM funds aimed at paying debts incurred by Napocor should come from the proceeds of the sale and privatization of Napocor plants and other assets, “and not only from stranded costs collected from electricity consumers.”
“PSALM says the reason their debts and payables have increased exponentially is because of the ERC. PSALM could be resorting to pointing fingers to hide itself from complicity.”
“Pointing fingers at the ERC is a virtual admission that PSALM depends on the payment of consumers to pay its loans and debts. That should not be the case,” explained Dagooc.
“There are, in fact, other options they could explore. Senator Recto already resorted to spoon feeding when he suggested the use of Malampaya Funds for PSALM’s debt payment. PSALM could have proposed this, trabaho nya yun,” added the NAGMEC president.
The EC group head insisted on the need for “a thorough and immediate investigation by the Energy Committees of the House of Representatives and the Senate to determine where the revenue earned and proceeds from the sale of plants and from the privatization of Napocor assets went.”
“There must be an accounting of these funds. What were the terms of reference? What was the manner of sale? Let us remember that PSALM’s obligations incur interests, by the day, including exchange rate fluctuations. These are very important questions that need urgent answers,” Dagooc said.
The NAGMEC chief also pointed out that while they only serve as mere collectors of these stranded costs, they bear the brunt of the consumers’ rage against increased electricity costs.
“Dahil sa dagdag na bayarin na naman yan, kami na naman ang babakbakan. Kolektor lang kami dito. But everytime may dagdag sa singil, kami ang binabanatan. PSALM should go around the country and explain to our consumers,” lamented Dagooc.
“The bottom line here is another round of suffering for the Filipino electricity consumer because of the inevitable increase in power rates while government agencies are engaged in a blame game.”
Share this article: