PSALM: SMC unit still owes gov’t P34B in trading Ilijan output

A unit of conglomerate San Miguel Corp. (SMC) has yet to pay the government P34.04 billion in relation to trading the output of the 1,200-megawatt Ilijan natural gas power plant, according to state-run Power Sector Assets and Liabilities Management Corp. (PSALM)

In a statement, PSALM said these “overdue payables [as of end-June]” from the South Premiere Power Corp. (SPPC), a wholly owned subsidiary of SMC Global Power Holdings Corp., were based on generation payments for the Ilijan power plant pegged against prices at the Wholesale Electricity Spot Market (WESM), the venue for trading electricity as a commodity.

As an independent power producer administrator (IPPA), SPPC has to pay PSALM capacity fees per an administration agreement dated May 11, 2010.

IPPAs, according to PSALM, are independent entities that manage contracts on behalf of the National Power Corp. (NPC) by trading at the WESM or through an agreement with a distribution firm such as the Manila Electric Co. (Meralco). PSALM was tasked under the Electric Power Industry Reform Act to privatize NPC’s assets.

While SPPC already paid about P285.37 billion last month, the state-led corporation said these remittances “were insufficient because they were not based on the WESM prices.”

“SPPC’s computations of generation payments were based on its power supply agreement with Meralco, of which PSALM is not a party,” it added.

The computation of the capacity fees is now at the “pretrial stage” at the Mandaluyong Regional Trial Court.

“However, while the aforementioned case is still unresolved, should there be any rate increase, then SPPC’s remittances to PSALM should be recomputed and adjusted accordingly, consistent with SPPC’s own legal position that such remittances to PSALM should be based on the power rates in its power supply agreement with Meralco,” it added.

SPPC officially assumed control of the Ilijan gas facility in June after its IPPA agreement with PSALM lapsed. The plant consists of two blocks with each having two gas turbine generators and one steam turbine generator, based on the Department of Energy website.