SMC Global Power Inc. is filing charges against officials of state-run Power Sector Assets and Liabilities Management Corp. (PSALM).
PSALM terminated the independent power producer contract of SMC Global’s wholly owned unit South Premiere Power Corp. (SPPC) for the 1,200-megawatt (MW) Ilijan power plant in Batangas.
The decision of PSALM is illegal as it has breached the Ilijan IPPA agreement, SMC Global claimed.
“We will sue PSALM management. We will pursue them until we get the justice in their harassment,” an official of SMC Global Power told reporters in a briefing on Tuesday.
The PSALM decision is a form of technical harassment so keep SPPC from taking part in other projects the state-run agency will bid out in the future, the official claimed.
The amount that PSALM is holding against SPPC is erroneous and goes against the provisions of Republic Act 9136 or the Electric Power Industry Reform Act.
SMC Global said SPPC has already paid PSALM a total of $180 billion in fixed and variable monthly generation payments.
SMC Global noted that P36 billion was billed by PSALM until August 2015 for the capacity of Ilijan power station whether the plant is on operating or not. The remaining P144 billion was paid by SPPC to cover the natural gas and diesel fuel consumed by the power plant.
“The remaining P12 billion or 8 percent is under bona fide dispute by SPPC due to differing interpretations of the contract provisions,” said SMC Global.
SMC Global said it has resolved some issues with PSALM, including the costs incurred during the 2011 Malampaya shutdown submitted by PSALM to SPPC. Pegged at P30,710.46 per kilowatt hour (kWh), the amount was an object of dispute by SPPC which claimed that it was exorbitant due to an erroneous formula in the IPPA agreement for the calculation of the cost.
“PSALM acknowledged that there was an error in the formula and submitted a correct computation LEP during subsequent Malampaya shutdowns. The cost incurred from the latest Malampaya shutdown on March 2015 was P6.37 per kWh,” SMC Global said.
SPPC raised four issues with PSALM that remained unresolved.
It claimed that PSALM was charging generation payments even when the Ilijan power station is down on a planned maintenance shutdown by operator Kepco-Ilijan and does not grant any relief during such periods.
PSALM used the National Power Corp. rates under the terms of understanding for computing the generation payments in all Meralco power supply contracts instead of using the rates approved by the Energy Regulatory Commission (ERC) in each of the contracts.
PSALM terminated the Ilijan IPPAA agreement because SPPC supposedly failed to settle the outstanding generation payments.
PSALM is claiming that SPPC owes P5.6 billion of “disputed generation payments” under the IPPA arrangement for Ilijan.
In its statement of account, PSALM noted the total receivables from SPPC was P79.8 billion and only P74.2 billion was settled while the rest was subject to resolution.