PSALM warned vs passing on class suit costs | Inquirer Business

PSALM warned vs passing on class suit costs

/ 02:00 AM September 05, 2014

An electricity consumer group has warned Power Sector Assets and Liabilities Management Corp. (PSALM) against passing on to consumers its cost for settling a class suit that requires the state firm to cough up over P60.24 billion.

Teddy Casiño, the convenor of the group called Power, said in a statement that state firm PSALM should not charge consumers an estimated P0.5143 per kilowatt-hour (kWh) hike in power rates in order to meet its legal obligation.

The class suit was against the National Power Corp. (Napocor), whose debts and assets are being managed by PSALM as part of the deregulation of the energy sector.


“PSALM should not punish us consumers for its mistakes. From an initial amount of P34.7 billion in 2011, the amount has bloated to P60 billion to include lawyers’ fees, interests and damages that have nothing to do with the consumers and everything to do with PSALM’s mishandling of this matter,” Casiño said.


Instead of implementing a universal charge, PSALM should negotiate with its former employees for a lower but just, fair and acceptable amount. “The management’s refusal to do so for so many years has caused the original amount to increase to what it is now,” Power said.

Power also called on PSALM to look for other sources of funding for the settlement, including collecting the balance of payments for assets and contracts that were privatized in the past.

“We understand that the National Grid Corporation of the Philippines (NGCP) still owes the government P51 billion in concession fees while Aboitiz Power Corp. and San Miguel Corp. has a balance of around P129 billion for its purchased IPP (independent power producer) contracts. There is also the Malampaya Fund and the annual appropriations from Congress. Maybe PSALM executives can reduce their perks,” Casiño said.

Power said that raising electricity rates would impose greater hardships on consumers and further make local industries uncompetitive.

PSALM is presently seeking ways of ensuring its cash flow as it faces the P60.24 billion settlement.

Earlier, the Regional Trial Court of Quezon City issued the garnishment notices in accordance with the Supreme Court Special Third Division’s resolution dated June 30 on the case filed by Napocor-Dama against Napocor. PSALM’s alleged payables was set by the sheriffs at P60,244,316,841.88 for the class suit petitioners, which comprise around 8,018 beneficiaries based on the petitioners’ representation to the Supreme Court. The amount includes a 10-percent lien amounting to P6,024,431,684.18 for the petitioners’ two lawyers and P1,807,329,725.25 for the Quezon City court as fees and costs for the execution of the Supreme Court’s resolution.


Ledesma said government funds dedicated for specific public uses may not be diverted for other purposes and seized under writs of garnishment to satisfy monetary judgments by courts. Instead, he said, all disbursements of public funds should be covered by an appropriation from Congress in order to avoid disruption of public functions. Ledesma also said that a money claim against the government should first be filed with the Commission on Audit, given its primary jurisdiction to examine, audit and settle all claims against the government.

The 2001 Electric Power Industry Reform Act unbundled Napocor, making way for the creation of PSALM to privatize or sell off Napocor’s assets and pay its debts. Napocor employees were terminated as part of its reorganization, and although many were rehired, the workers contested that they got lower pay and that new arrangements increased contractualization in their workplace.

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TAGS: Business, Class suit, electricity, power, PSALM, Teddy Casino

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