Press Release
September 5, 2012

DOE, ERC failed to rein in PSALM from overcharging customers

Sen. Ralph G. Recto yesterday expressed dismay over the failure of the Department of Energy (DOE) to detect and stop state-run Power Sector Assets and Liabilities Management Corp. (PSALM) from overcharging power consumers.

"Who's minding the store at the DOE? I'm sure they knew about this but they did not act on it,' Recto, Senate ways and means chair and senior energy committee member, said.

Recto said the Energy Regulatory Commission (ERC), an attached agency of the DOE, detected the overcharging as early as March 2011 but the DOE seemed to have abandoned its responsibility to champion the cause of small power consumers by acting to rectify the situation.

"Whether it's P9.1 billion or less, the electrifying truth remains that PSALM, under the very noses of DOE and ERC, committed a big public disservice against power consumers already fried with high oil and power prices," the senator said.

Recto stressed that there should be an immediate suspension in the collection of the transmission line costs or charges where the overcharging emanated as PSALM, ERC and Meralco jointly harmonize their numbers.

"The DOE defaulted on its task to prep ERC on its regulatory powers while the latter relaxed its oversight function over PSALM," he said.

Recto added: "The worst part is that the pursuit of public accountability was surrendered, in this case, to a private power utility, Meralco, which was the one berating PSALM for overcharging."

The senator reiterated that it was disheartening to learn that it took Meralco and private power cooperatives to squeal on the overcharging by a government power agency "while the rest of the state supervising agencies just stood and watched."

Meralco earlier complained of being double charged because of the 2.98-percent transmission loss recovery (or line losses) included in the transition supply contract (TSC) and the line rental charges, which are made up of the congestion cost and line losses, being collected by Philippine Electricity Market Corp. (PEMC) since WESM started operating in June 2006.

The ERC, in a decision dated March 10, 2010, already found a "double charging in transmission line costs" but no immediate rectification was pushed.

Meralco has suggested an outright refund of the 2.98-percent transmission loss recovery factor included in the TSC in the amount of P9.1 billion. Electric cooperatives have claimed of another P4 billion in overcharges by PSALM.

This proposal, however, was countered by PSALM, which insisted that the computation for the refund should be based on actual segregated line rentals.

ERC executive director Francis Saturnino Juan has said the P9.1 billion is not yet a final figure and will have to be deliberated by the commission.

The P9.1 billion represented the amount of refund arrived at by Meralco based on its suggested computation.

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