Electric co-ops, distributors face disconnection

The Department of Energy (DOE) and the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) are serving notice to rural electricity cooperatives (ECs) and private distribution utilities to pay debts that have grown to roughly P30 billion.

The message is: Pay up or your power supply will be cut off.

PSALM president Emmanuel R. Ledesma Jr. said in a text message that ECs under the National Electrification Administration (NEA) had P20.06 billion in unpaid dues while private utilities owe a combined P6.67 billion.

That was as of the May 31, 2013 records of PSALM, which manages the supply of electricity from the government’s remaining power generators.

The DOE estimates that these collectibles may have already reached about P30 billion.

Earlier, Energy Secretary Carlos Jericho Petilla told reporters that PSALM and energy regulators bear a growing burden and that debt sanctions had been held off due to legal constraints and/or local politicians’ requests to spare their constituents from blackouts.

Unpaid power bills, however, allow inefficiency and other problems of ECs to fester and risk the viability of power generators.

This endangers the country’s energy systems as the thinking spreads that electricity debt and delinquency will be tolerated.

Certainly, having P6.08 billion in payables must have taken years for ECs such as Lanao del Sur Electric Cooperative Inc. (LASURECO) to incur.

That is the largest amount owed PSALM by an EC and nearly as much as the total debt of private distribution utilities.

Part of the solution is to serve disconnection notices to delinquent power distributors, Petilla told reporters recently.

At most, Petilla said, about 5 percent of the country would suffer blackouts until the debtors realize that regulators mean business.

Olongapo City, for one, is not waiting for its schools, offices and households to go powerless.

The city privatized its Public Utility Department, which used to distribute electricity in the city, to pay at least some of the debts.

As per PSALM data, local leaders recently settled P645.74 million and restructured some P4.43 billion of the city’s P5.08 billion in payables (the second-largest debt to PSALM after LASURECO’s).

The city will also settle some P90 million in dues in two months starting July 5, 2013.

Another part of the solution is to support energy managers and regulators so they can effectively prod power distributors to improve efficiency and pay generation dues responsibly.

Petilla said he had not only advised PSALM to serve disconnection notices to errant debtors, he also told NEA to monitor rural cooperatives closely and step in before they default on payments.

NEA data show the agency created to push rural electrification has 109 ECs under its supervision.

“I’ve given them (NEA) a template to make monthly projections for the next 20 years for each EC, predicting when it may default. Even A+ organizations can default. If NEA can tell that demand and salaries are growing but system losses are high, eventually, they would know that it may result in payment default,” Petilla said. “They shouldn’t wait for ECs to skip payments.”