Electricity rates to go up P0.5143/kWh due to PSALM suit

Electricity rates to go up P0.5143/kWh due to PSALM suit
PSALM warns of a hike in the universal charge if it is forced to settle over P60-B in damages from a suit filed by former employees

MANILA, Philippines – Electricity rates may rise by an additional P0.5143 per kilowatt-hour (kWh) if the Power Sector Assets and Liabilities Management Corporation (PSALM) is forced to settle over P60 billion in damages from a suit filed by former employees. (READ: Gov’t warns of power shortage, addt’l charges amid PSALM’s money woes)

The universal change, a separate line in the electricity bill, will go up to P6.80 per kWh from P6.287 per kWh currently if PSALM were to recover the damages. The additional P0.5143 will be recovered every month for 5 years. With a recovery period of 10 years, the amount will be lower at P0.2616 per kWh.

The Quezon City regional trial court recently ordered PSALM to pay over P60 billion in compensation to employees it terminated when it reorganized the National Power Corporation (Napocor) in 2003 in compliance with the Electric Power Industry Reform Act. At the same time, the court’s sheriff sent private sector generation administrators and distributors notices of garnishment requiring to report PSALM funds in their possession for seizure.

The court’s decision was based on a June 30 Supreme Court resolution that upheld the settlement to the employees.

PSALM president Emmanuel Ledesma, Jr. said the garnishment of the agency’s funds would affect daily operations.

Energy Secretary Carlos Jericho Petilla also expressed concern.

“My more serious problem is whether PSALM can contract for next year. If its funds are garnished, can it operate? That is the more serious problem,” Petilla said.

Thus, PSALM and Napocor have filed a motion for reconsideration before the Supreme Court.

At present, PSALM is responsible for the fuel supply and operations budget of its power plants such as the Malaya Thermal Power Plant in Luzon, Power Barges 101, 102 and 104 and the Naga Coal-fired Thermal Power Plant in Visayas.

In all, PSALM’s plants produce 430 megawatts in dependable capacity.

PSALM is also obliged contractually to provide for the fuel requirements of Independent Power Producer plants, namely Ilijan Natural Gas Power Plant in Luzon, and Zamboanga Diesel Power Plant and General Santos DPP in Mindanao.

The Energy department has asked the Joint Congressional Power Commission to allow PSALM to contract additional generating capacities to plug the anticipated power deficiency in summer 2015.

Petilla earlier said demand in Luzon would be 9,011 MW next year, higher than this year’s 8,717 MW. He said there would be a deficit of 200 MW next year, and an additional 400 MW to 500 MW capacity is needed to act as buffer supply. (READ: Power emergency: What it means) – Rappler.com

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