ERC turns down PSALM demand to collect P9B
By Abigail L. Ho
Philippine Daily Inquirer
First Posted 03:51:00 07/05/2008
MANILA, Philippines—The Energy Regulatory Commission (ERC) has upheld its decision to peg to the time-of-use (TOU) rates of National Power Corp. the prices on the wholesale electricity spot market (WESM) during some “questionable” months in 2006, effectively preventing collection of about P9 billion from power users.
In an interview Friday, ERC Chairman Rodolfo Albano Jr. said the TOU rates would serve as the benchmark for WESM third and fourth billing months instead of the adjusted prices that the WESM operator, Philippine Electric Market Corp. (PEC), imposed during that time.
The PEMC-imposed adjusted prices, he said, were higher than the TOU rates of National Power Corp. (Napocor).
“In the particular subject case, the adjustment on the WESM prices was appropriately made using the ERC-approved Napocor TOU generation rates as benchmark, the same having passed the reasonableness test and have been subjected to the usual public hearing and evaluation by the ERC,” Albano said.
The ERC stood by its decision in response to a pending demand of Jose Ibazeta, president of Power Sector Assets and Liabilities Management Corp. (PSALM), for payment from PEMC of almost P9 billion from power buyers on the electricity bourse.
In a letter addressed to PEMC president Lasse Holopainen late last year, Ibazeta said that since the ERC had found PSALM trading teams innocent of price manipulation, the government agency was entitled to full payments for power sold in the market from the Aug. 26-Oct. 25 trading months.
“Based on the order of the ERC, it logically follows that the market clearing price for the third billing month are valid and must be effected. Thus, payment of the traded amount based on the market clearing prices for the said period is legally and appropriately due to PSALM,” the letter said.
“For the same reason, payment for the fourth billing period, though not covered by the investigation, has likewise been adjusted using the administered price,” it added.
The P9 billion that PSALM wants represents the difference between the actual payments for energy traded in the third and fourth billing months (close to P6.7 billion) and the amount due to PSALM based on the market clearing prices (P13.8 billion), plus the corresponding value-added tax (almost P1.2 billion) and interest based on Napocor’s non-prime lending rate (P606.4 million).
But even if the ERC had cleared PSALM of price manipulation charges in 2006, it authorized the adjustment of rates for the third and fourth WESM trading months to match those of Napocor’s TOU rates.
Albano said the rates pegged on Napocor’s TOU rates would stay.
“They should file a motion for reconsideration. If they find out that we have abused our discretion, then that’s the only time they can forward their petition to the [Court of Appeals],” he said. With editing by INQUIRER.net
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