THE House Committee on Energy yesterday directed the Department of Energy and the Power Sector Assets and Liabilities Management Corporation (PSALM) to renegotiate the 19 contracts with Independent Power Producers (IPPs) which the government has allegedly overpaid by $10 billion for the last 10 years.

During yesterday’s Ugnayan sa Batasan Media Forum, Paranaque Rep. Roilo Golez said his motion for the renegotiation of the IPPs’ contracts has been approved by the panel investigating the rationale of the P0.39 per kilowatt hour (kwh) filing for universal charge application. 

Golez claimed that the government overpaid the IPPs by $10 billion, an amount enough to build 10 power plants and help supply the energy requirement of the country. 

“The amount ($10 billion) is already enough to take care of our power needs in 10 to 20 years,” Golez told reporters.

But when asked about the culpability of officials behind the forging of contracts with IPPs, Golez said he is after the renegotiation and the issue was not discussed during yesterday’s hearing by the panel.

He was saddened by the fact that the country has earned the distinction of having the highest electricity in Asia which is 18.1 cents per kwh, even higher than Japan’s rate of 17.9 cents per kwh.

“You can see the differences which are burdensome to our people as far as universal charges are concerned,” said Golez, adding that the IPPs’ average rate is 20 cents per kilowatt hour.

The committee also adopted the motion of Bayan Muna party-list Rep. Teodoro  “Teddy” Casiño suspending all the Energy Regulatory Board hearings on Universal Charges.                       

Casiño said renegotiating the contract with IPPs will help reduce or totally do away with P74 billion worth of stranded contract costs that it plans to pass on to electricity consumers via a monthly P0.36/kWh universal charge.

"PSALM's petition for a rate hike is not only cruel, considering that this would further increase the already highest power rates in Asia, but is also unjust because it legitimizes the onerous contracts entered into by previous administrations with favored IPPs," said Casiño. Among the most onerous features of the contracts are the "take or pay" provisions that require payment even for unused power.

Casiño also decried the position of PSALM and ERC to recover the P74 billion stranded contract costs within four years, resulting in a P0.36/kWh increase in power rates. Under questioning, PSALM officials admitted that at a 15-year recovery rate, the actual increase could be dramatically trimmed down from P0.36kWh to only P0.06/kWh.

"Existing regulations allow for the recovery of these costs in 15 years, resulting in a much lower rate hike. Pero minamadali nila at the expense of our consumers. Why are they again favoring the IPPs over our people?" Casiño asked.

"Eh ayun naman pala. Pwede naman palang less than one centavo ang increase. Why insist on recovering the money in four years?" asked Casiño. The ERC told him, however, that the matter is still up for their consideration.

During the hearing, Casiño insisted that it was illegal and unjust for PSALM to pass on an additional P66 billion worth of stranded debts to electricity consumers considering that PSALM had already earned P474 billion from its privatization program.

He said this is almost double the amount needed to cover the P255 billion stranded debt mandated under the 2001 Electric Power Industry Reform Act (EPIRA). "In fact, kumita pa nga kayo," he told PSALM officials.