P400-B uncollected power charges show ‘dead end’ in energy laws

Lian Buan

This is AI generated summarization, which may have errors. For context, always refer to the full article.

P400-B uncollected power charges show ‘dead end’ in energy laws
Lawmakers want to collect debts now, as government lawyers stand firm on proper procedures on compromise agreements

MANILA, Philippines – Congressional hearings have exposed a “dead end” in energy laws and other relevant codes as the government chases a 2026 deadline to collect over P400 billion worth of uncollected power charges.

Rizal 1st District Representative Michael John Duavit conceded that nothing can stop power firms from disputing the charges in court. Unfortunately for the government, some of the firms have been winning the disputes.

“So in aid of legislation, as far as this particular issue, with regards to the Energy Regulatory Commission (ERC), we are at a dead end in my opinion as far as this hearing is concerned,” Duavit said on Wednesday, March 11, during the third hearing of the House committees on good government and public accounts.

“We can all agree that interpreting the laws we write is not within our ambit,” Duavit added.

Several lawmakers seemed inclined to force payment using settlement agreements, but that solution may not be the most legal, according to the Office of the Solicitor General (OSG), citing the administrative code.

There were also problems with lower court injunctions favoring power firms over the government, when the Electric Power Industry Reform Act or the EPIRA law said it’s the ERC that has jurisdiction over energy disputes, and not the court.

What’s the issue? House committee on public accounts chair Mike Defensor said that as of now, the Power Sector Assets and Liabilities Management (PSALM) – tasked to manage the debt of electric firms – is yet to collect P430 billion.

PSALM’s corporate life ends in 2026, which gives government 5 to 6 years to collect all debts.

“Kapag hindi nakulekta ‘yung pera na ‘yun at nagsara ‘yung PSALM (if we don’t collect that and PSALM closes down), this debt will be again part of the cost to be paid not by the government but by the Filipino consumers, so it is incumbent upon us to make sure PSALM will be able to collect to make sure we have a sustainable energy sector,” Defensor said on Wednesday.

What’s the problem? The main problem is that power firms are disputing these charges in court, creating a deadlock.

For example, there was a dispute between Meralco and the National Power Corporation (Napocor) in 1990 over a contract of sale of electricity. Meralco and Napocor decided to enter into a settlement agreement where Meralco would pay P15 billion to the government.

The OSG, under then solicitor general Agnes Devanadera, opposed this and said the agreement was “contrary to law and public policy,” as relayed to the House on Wednesday by Assistant Solicitor General Vida San Vicente.

San Vicente said P15 billion is “well below the amount the NPC is entitled from Meralco which is around P50 billion including surcharge and interest.”

The OSG’s opposition was filed before the Supreme Court through a Motion to Intervene, which remains pending before the High Court.

Defensor pointed out that Meralco is willing to pay now, and asked OSG if it can withdraw its motion.

“We are bound by law and jurisprudence not to withdraw the petition,” said San Vicente.

San Vicente also invoked Section 20 of the Administrative Code which says any compromise agreements exceeding P100,000 shall go through the Commission on Audit for recommendations, and shall be then submitted to the Congress.

Defensor pointed out that if it was to be based on Section 20, so many of PSALM disputes would need Congress approval.

“I’m sorry Solicitor General, there have been many arbitration by the Supreme Court without Congress’ approval, pero hindi naman lahat kailangan Congress ang mag-approve nito (but not all needed Congress approval), it has been happening,” Defensor said.

“We stand by our arguments, we are bound by the law,” said San Vicente. 

The trouble with court injunctions. Another company with an ongoing dispute is the South Premiere Power Corporation (SPPC), a subsidiary of the Ramon Ang-owned San Miguel Global Power Corporation.

PSALM wanted to terminate SPPC’s contract for not paying over P6 billion in outstanding generational payments from 2012 to 2015. 

The SPPC scored an injunction from the Mandaluyong Regional Trial Court. That is still pending.

Deputy Speaker LRay Villafuerte questioned the jurisdiction of the lower court, citing the EPIRA law. Section 43(v) of the law says it’s the ERC that “shall have the original and exclusive jurisdiction over all cases involving disputes between and among participants or players in the energy sector.”

Moreover, Section 78 said it’s only the Supreme Court that can issue injunctions over the “implementations of this act.”

PSALM president and CEO Irene Besido Garcia said they questioned the jurisdiction of the lower court all the way to the Supreme Court, but they’ve already lost.

Garcia said they just resorted to filing a counterclaim with the Court of Appeals, where they are still asserting that the lower court had no jurisdiction.

Villafuerte said there may be negligence on the part of ERC and PSALM for not asserting their powers, but Duavit said that the petitions filed all the way to the Supreme Court mean “they’ve exhausted all available remedies.”

Willingness to pay? SPPC said it is willing to pay in advance P22.68 billion worth of capacity fees to PSALM.

Garcia said there is actually no dispute in the capacity fees so she is inclined to accept SPPC’s advance payment, as long as the terms are clear that they are not waiving their opposition to the ongoing court case over the generational payments.

“I would certainly recommend that we accept the money because as I’ve already said, PSALM needs the money, in fact this year we need to borrow around P40 billion for us to be able, for us to meet our obligations,” said Garcia.

Garcia added, “However it’s important for us to establish the collatilas for that acceptance because we don’t want  to prejudice the legal positions of PSALM.”

Cagayan de Oro 2nd District Representative Rufus Rodriguez said there’s not much that the House can do.

“Why should this committee continue hearing a subject matter already lodged in the courts? Whatever we ask from them only the courts can decide,” Rodriguez said.

Defensor said the hearings are meant to thresh out what the lower chamber can do to help expedite the collection.

“If there is a need for a policy or a law, then we will be able to do that,” said Defensor. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI

How does this make you feel?

Download the Rappler App!
Face, Happy, Head


Lian Buan

Lian Buan is a senior investigative reporter, and minder of Rappler's justice, human rights and crime cluster.