Eastern Samar Rep. Ben Evardone, who has been monitoring progress on the petitions, said the decision of the ERC greatly favors consumers.

“The decision of the ERC is a major victory for us consumers who will be spared of the additional burden of high electricity costs due to the mismanagement and anomalies in PSALM and the National Power Corp.,” he said.

PSALM was created through the Electric Power Industry Reform Act of 2001 (EPIRA) to sell Napocor assets and pay off the state power firm’s huge debt. The law also states that the government may absorb Napocor’s outstanding contract costs and debts that would not be covered by the privatization and billing proceeds from consumers. ERC director Francis Saturnino Juan said PSALM failed to submit the pertinent documents and its revenue statements. The ERC dismissed last Nov. 15 the four pending petitions of PSALM to impose universal charge (UC) for 25 years to recover Napocor’s Stranded Debts and Stranded Contract Costs.

Stranded debts refer to finan;;/;;//cial obligations of Napocor unpaid by the proceeds from the sale and privatization of its assets. Stranded contract costs, on the other hand, refer to the higher contract costs of electricity from IPPs than the actual selling price.

Juan said PSALM also did not submit pertinent documents to support the petitions. The ERC also observed that the calculation of Stranded Contract Costs included fuel costs, the recovery of which is governed by a separate mechanism.

ERC also noted that in its petition for the recovery of Stranded Debts, there are inconsistencies in the calculation of the proceeds of the sale of Napocor’s generation plants. PSALM, however, can re-file the petitions.

In its June 30, 2009 petition, PSALM estimated Napocor’s Stranded Debts at P470.87 billion by the end of 2005. To recover this, it proposed a levelized stranded debt charge of up to 30.49 centavos per kilowatt-hour to be imposed on consumers. To recover the Stranded Contract Costs for the Luzon grid amounting to P22.256 billion, PSALM petitioned to be allowed to impose a UC of 50.24 centavos per kilowatt-hour. On June 29, 2010, PSALM filed a similar petition, this time to impose a UC of 57.20 centavos per kilowatt-hour to recover its P26.685 billion Stranded Contract Costs for 2009. In the petition, its said that this year, Napocor’s Stranded Debts are expected to reach P54.898 billion, which could be recovered through a power rate increase of 86.77 centavos per kilowatt-hour.

“Although recovery of Napocor’s Stranded Debts and Stranded Contract costs is recognized and sanctioned by law, the ERC is bound to vary the reasonable amounts that will be allowed for recovery through the UC,” Juan said. “Without all the supporting documents to validate PSALM’s claims, the ERC cannot even begin to discharge such mandate.”

In a recent privilege speech, Evardone said PSALM does not need to charge consumers to liquidate Napocor’s debt of almost P572 billion because the proceeds from the sale of its assets are enough to cover its liabilities.

He noted that PSALM earned $10.6 billion from privatization and obtained $2.8 billion in new loans.

“But it has paid only $1.3 billion of Napocor’s indebtedness. Where did the $12.1 billion go?” Evardone said.

He said that in 2001, when Congress enacted the EPIRA, Napocor’s debts stood at $9.3 billion.

“Under Epira, taxpayers, through the national government, immediately absorbed P200 billion or about $4 billion of those debts, leaving a balance of $5.3 billion,” he said.

He said if PSALM paid the balance of Napocor’s indebtedness using the $10.6 billion generated from the sale of its assets, the government would still have a surplus of $5.3 billion.

“But there is no surplus. They even contracted new loans. To make things worse, they want consumers to pay more than P500 billion over 17 years for so-called stranded debts of Napocor and independent power producers,” he said.

“I think our people will not accept new rounds of increases in electricity rates unless they are informed and satisfied where billions of dollars in privatization proceeds and new loans went,” he added.

Jess Diaz, Philippine Star