San Miguel: Let courts rule on PSALM case vs SPPC

By Lenie Lectura -February 25, 2020
from Business Mirror

San Miguel Corp. (SMC) criticized the government for releasing willy-nilly disputed figures to gain public approval in an ongoing case concerning the Ilijan power plant.

The conglomerate has urged the Department of Finance (DOF) and the Power Sector Assets and Liabilities Management Corp (PSALM) to give the country’s justice system a chance instead of resorting to trial by media.

SMC said its power arm South Premiere Power Corp. (SPPC) has not received any billing statement from PSALM for the alleged unpaid amount of P23.94 billion.

“We are one with the DOF and PSALM in wanting to have closure to the case,” SMC President Ramon S. Ang said. “However, premature closure by distorting the facts through the court of public opinion is only compromising the integrity of our justice system.”

The legal dispute between SPPC and PSALM has been pending with the Mandaluyong Regional Trial Court (RTC) since 2015.

“Let us not undermine the integrity of the court and return to basics. We choose to be on the side of law instead of presenting a good yet misleading story. Let us stick to the facts of the case and let the court decide,” Ang added.

Ang is reacting to a series of stories coming out in the mainstream media quoting the DOF as running after SMC over its alleged unpaid debts to PSALM, through SPPC, on the 1,200-megawatt Ilijan power plant. To expedite its resolution, SPPC filed a motion for PSALM to produce documents in order to have full disclosure of the facts.

However, instead of just proceeding with the discovery process by submitting the requested documents, PSALM filed a motion to hear other defenses unrelated to the merits of the case, which the RTC and the Court of Appeals have both denied.

The RTC has also indefinitely enjoined PSALM’s termination of the Independent Power Producer Administrators (IPPA) agreement in favor of SPPC while the case remains pending. Such injunction has been upheld both by the Court of Appeals and the Supreme Court, according to SMC.

PSALM recently said that SMC owes the government P23.94 billion and that the amount is based on the company’s bid to become the IPPA of the Ilijan Power Plant. It added that SMC should thus bear the “financial consequences” of its bid.

However, the main dispute between PSALM and SPPC is due to differing interpretations in computing-generation payments provided for under the IPPA agreement, not in the figures stated in SMC’s bid documents.

Generation payments are based on actual generation data and the determinants of revenues derived from the capacity of the Ilijan power plant, both of which could not be reasonably determined and, thus, would not be information included in the bid when the IPPA for the plant was bid out, Ang explained.

He added that of the P314.6 billion paid by SPPC to PSALM as IPPA of the Ilijan power plant, about P240.7 billion paid as of January 31, 2020, by SPPC is considered as generation payments.

In a statement, Ang said PSALM failed to explain its reasons for claiming an additional amount of P23.94 billion in generation payments and related charges from SPPC.

Ang explained that the dispute stems from PSALM’s erroneous use of prices in the Wholesale Electricity Spot Market in computing for generation payments beginning January 2013 to date. SPPC used the tariff rate approved by the Energy Regulatory Commission (ERC) for the Ilijan power plant, when appropriate, as required under the IPPA agreement in computing generation payments to PSALM.

This approach is also consistent with the baseload nature of the Ilijan power plant and the fact that its capacity is contracted in full to bilateral customers, primarily Meralco, which pays a tariff rate approved by the ERC.

SPPC has also not received any billing statement from PSALM claiming the alleged unpaid amount of P23.94 billion, Ang was quoted in the statement as saying.

“Interestingly, PSALM has released the figure to the media instead of informing affected party SPPC or SMC,” Ang said. “Based on PSALM’s last billing statement to SPPC, it is claiming just P15.63 billion.”