DOE warns of power rate hike

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THE Department of Energy (DOE) on Wednesday warned of a possible power rate hike if the court order for the garnishment of Power Sector Assets and Liabilities Management (PSALM) funds is carried out.

The sheriffs of the Regional Trial Court (RTC)-Quezon City (QC) Office of the Clerk of Court and Ex-officio Sheriff earlier issued notices of garnishment to PSALM’s banks, customers, and other energy industry partners.

This is in accordance with the Supreme Court Special Third Division’s Resolution favoring the claims of NPC (National Power Corp.) Drivers and Mechanics Association (NPC-DAMA) amounting to P60.24 billion.

Energy Secretary Carlos Jericho Petilla said if the Supreme Court (SC) stands pat on its decision, PSALM has no other options but to look for additional funds through loans.


“What I’m looking at as a way out here is to source out an additional loan if the Supreme Court will not change its decision,” said Petilla.

He further explained that in the event PSALM secures an additional loan, that in turn, will have to be passed on to consumers.

“If PSALM will have an additional loan because of the garnishment in order not to affect its operations, this will be charged to the people because that’s part of the operating cost,” he added.

The DOE chief could not give a clear estimate of how much that would mean for power consumers. He only cited an estimate based on the last hearing of the PSALM Board that at least 19 centavos per kilowatthour (kWh) would be passed on to consumers in the case of a P14-billion loan.

Given this, Petilla said PSALM has filed a motion for reconsideration before the SC asking the latter that the matter be taken up and decided upon by the Court en banc and not just by a special division.

“We are hoping that the SC will reconsider its decision or perhaps it may lower the claim because P62 billion is a big problem to the finances of PSALM,” he added.

Earlier, Emmanuel Ledesma Jr., PSALM Corp. president and CEO, warned there could be a nationwide power shortage if their funds were garnished.

He explained that in such case, PSALM’s long-term debts would become immediately due and demandable, which would result in an operating cash deficit and would lead to a power shortage nationwide.

“If our funds are garnished, our long-term debts would become immediately due and demandable,” Ledesma said. This would result in an operating cash deficit, which would lead to a power shortage nationwide, he added.

Petilla also pointed out that the garnishment would cause financial imbalance for PSALM because it could no longer pay for fuel for its plants.

PSALM is responsible for the fuel supply and operations budget of its owned power plants, namely the Malaya Thermal Power Plant in Luzon, Power Barges (PBs) 101 and 102 and Naga Coal-fired Thermal Power Plant (CFTPP) in the Visayas, and PB 104 in Mindanao, all of which produce around 430 MW in dependable capacity.

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

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3 Comments

  1. Someone please explain to me – the privatization and deregulation law and thus creation of PSALM is supposed to solve the financial issues associated with NAPOCOR. PSALM sold almost all the power facilities of NAPOCOR and yet running out of money? Simple math – where did the money go? Why is PSALM is in dire financial straight?

  2. Saan ka namang nakakitang bansang tumataas ang koryente samantalang ang Iba ay nagbababa dahil mababa ang langis sa mundo kundi sa bwisit na bansang ito! Wala na ba talaga kaming pagasang makaahon sa kahirapan?