E-SEASON – TUCP slams ERC on power rate hike

Trade Union Congress Party (TUCP) Rep. Raymond Mendoza expressed dismay over the 19 centavo per kilowatt-hour increase in the universal charge approved by the Energy Regulatory Commission (ERC) sought by the Power Sector Assets and Liabilities Management (PSALM).
According to Mendoza, “The added 19 centavo increase that will form part of our monthly bills is no joke. In effect, the people will be paying for stranded contract costs for electricity that was never used. An additional P39.06 per kilowatt-hour will be paid by a consumer who uses 200 kwh per month. This is unfair. Why charge us for something never even generated by the Independent Power Producers (IPPs)?”, asked Mendoza.
The TUCP accused PSALM as acting as a collecting agent for the IPPs which have take-or-pay contracts with the National Power Corporation (NAPOCOR). “The new PSALM leadership under PNoy is not observing the ‘matuwid na daan’. PSALM knows that many of these IPPs never constructed power plants, or if they did, never constructed the contracted capacity. PSALM is legitimizing plunder by these IPPs. If such capacity were not in place during the original period of the contract that already constitutes breach of contract on the part of the IPPs. That should exempt government from the liability of paying them,” explained Mendoza.
“The issue is not solely about power never generated and never consumed. The larger issue is about consumers being made to pay when some IPPs never constructed power plants at all. And of those who did some, never constructed their obligated capacity. These IPPs violated their contract with the NAPOCOR. We do not owe them a cent!” stressed Mendoza.
The 19 centavos per kWh represents the difference of the costs of these contracts with the IPPs from the proceeds of the privatization of the assets of the NAPOCOR. These are now being collected from all power consumers. “Instead of acting as an agent for these IPPs, PSALM could have also argued that even where these plants were actually set up, their capacity was far under capacity which these IPPs promised the government they would construct,” added the TUCP solon.
“So now PSALM – with ERC blessings – hits us with a double whammy. We are being made to reward IPPs for never constructing their promised power plant. And we are being made to reward IPPs for not fulfilling the promised power capacity they undertook to set up,” complained Mendoza.
“TUCP appeals to the President to order the holding in abeyance of the 19 centavo per kWh increase this month and instead order the setting up of a Presidential Task Force to review these stranded costs of NAPOCOR,” said Mendoza.
“TUCP fully believes that several of these IPPs were in breach of contract. This breach was never uncovered as at the time of the life of the contract power demand dramatically declined because of the Asian Financial Crisis starting in June of 1997,” added Mendoza. “If the IPPs were in breach of their contract with the government then, it follows that there was no stranded cost for which government is now collecting for these IPPs,” added Mendoza.