A few years back, the Power Sector Assets and Liabilities Management Corp (PSALM) was slammed for inefficiency and questionable transactions. The privatization of power plants that it carried out had all the taint of sweetheart deals, according to alarmed lawmakers. The tenders were low. Not only were the terms of the bids skewed in favor of the bidders. In one specific case, the winner in the bids put up by the PSALM had been granted generous after-sale perks, including fuel supply at give-away terms.
Buried in some congressional files are the paper trail of the questionable privatization deals undertaken by PSALM which sum was this: the interests of the private bidders trumped the need to make power rates competitive and power supply efficient.
PSALM, whose dual mandate is to handle the privatization of former Napocor power plants, and operate the power plants that have yet to be privatized, was described during those times as a government corporate agency with a record that was unblemished by good marks and efficiency. In short, all taints and no positive marks.
Today, there are fresh revelations that may push either the Senate or the House to go into an in-depth inquiry into the operations and transactions of the PSALM. The charge is too serious to ignore—that the PSALM, by not operating the Malaya power plant during the late 2013 power shortage, profited immensely from the idling. Malaya is one of the Napocor-owned power plants still awaiting privatization, and still under the management of PSALM.
The total reported earnings of the PSALM-operated power plants during that short period of ultra-tight power supply late last year was a whooping figure of P6.8 billion. The amount of P6.8 billion is way, way above the total allocation of the state universities and colleges (SUCs) in the whole Central Luzon, from the flagship Central Luzon State University in Nueva Ecija to the smallest SUC in the region, the ASCOT in Aurora province.
You might want to be cleared on this issue. How come PSALM earned so much during the November- December power supply crisis when it did not operate the Malaya plant despite the supply crisis? By not operating Malaya, the conventional assumption was this: PSALM may have forfeited its chance to make money. In fact, that was the official claim of PSALM—that the non-operations of Malaya led to losses, not profits.
Wrong. And the data, which thankfully cannot be hidden in this day and age, showed how PSALM profited from that period of general misery to power consumers. And the data showed where PSALM made its killing. Here it is, thanks to the data recorded by the Wholesale Electricity Spot Market (WESM).
While the Malaya plant was practically idle throughout the late 2013 power supply crisis, the PSALM’s three other power plants—Kalayaan, Casecnan and Carilaya—operated full-blast—turned out huge earnings from that general period of power supply instability.
You see, the market price for power supplied during that period surged to P62 per kilowatt hour (Kwh), one of the lowest moments in the history of Philippine power prices. Casecnan, Kalayaan and Carilaya all mightily benefited from that power rate surge. Malaya underperformed or was practically idle during those months but Casecnan, Kalayaan and Carilaya more than made up for the Malaya income slack.
The idling of Malaya did not drag down PSALM ‘s earnings. Instead, the idling caused an unprecedented earnings boost to PSALM overall during those two short months of a historic power supply crisis.
The four power plants of PSALM, including the mostly –idled Malaya, generated and sold 335.20 gigawatt hours (GWh) of power in November and December of 2013 at a total price of more than P6.8 billion, mostly at the highest, unconscionable prices. That data had been provided to a Senate panel that investigated the late 2013 power crisis.
Question. Did PSALM intentionally idle Malaya to skew the electricity market and cause a power rate surge? And generate huge earnings for its three other power plants? In short, use the Malaya idling as a ruse to cripple supply and manipulate power rates? Did PSALM sabotage the normal workings of the electricity market?
Energy Secretary Jericho Petilla admitted before a Supreme Court hearing on the power rate crisis that PSALM, indeed, had been found behaving in an “anti-competitive” manner. Petilla told the SC justices that PSALM would be “sanctioned” for that anti-competitive behavior.
The PSALM offered bids at the open electricity market but failed to fulfill its supply commitment, said Petilla. Power regulators have been worried about the actuations and behavior of PSALM, he added.
It is fair to assume that Petilla’s words against PSALM were understated. There is apparently a bigger story to the charges that PSALM has been manipulating most things under its mandate—from the bidding of power assets owned by the state to the rigging of the electricity market.
A full-flown legislative inquiry is definitely in order.