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ERC Clarifies Status of PSALM’s Petitions

The Energy Regulatory Commission (ERC) clarified that some of the applications of Power Section Assets and Liabilities Management Corp. (PSALM) to recover Stranded Debts and Stranded Contract Costs are yet to complete the legal proceedings or hearings while the other petitions that were already for decision needs the Commission en banc’s go signal to resolve the same.  ERC’s explanation was made in light of the statements made by Senate Committee on Energy Chairman, Sen. Sherwin Gatchalian, during the Senate Hearing on the proposed Cheaper Electricity Bill Act held on 30 July 2018.

“With regard to the subject applications of PSALM, the ERC have already issued five (5) Decisions (in 2013 and 2017), another one (1) is for the issuance of a Decision, while four (4) other cases are still undergoing hearings.  I understand the dilemma that PSALM is currently into, but my hands are tied given the non-quorum stature of the ERC,” ERC Chairperson and CEO Agnes VST Devanadera clarified.       

The internal turmoil resulting from the death of ERC Director Francisco “Jun” Villa added to the regulatory lag.  The deceased director accused former ERC Chairman Jose Vicente Salazar of irregularities in the procurement process of the ERC audio-visual project (AVP).  Salazar was suspended on May 4, 2017 and eventually dismissed from the service on October 6, 2017.  The issue triggered hearings, investigations, and internal movement of personnel that virtually sidetracked ERC from performing its regular functions.  Furthermore, the subsequent suspension of the four (4) ERC Commissioners soon after Chairperson Devanadera’s appointment in December 2017 provided her with limited authority and restricted her actions to administrative matters.  Another difficulty beset the ERC in late June 2018 when another suspension was served upon the Commissioners for simple neglect of duty.  The ERC is still without quorum up to this moment.  

Despite all the unforeseen challenges, Chair Devanadera worked on putting the house in order by introducing initiatives meant to hasten and streamline the ERC’s regulatory processes.  She launched the short-term program for efficiency tagged as “ERC’s 5Es”, which covered her Zero-Backlog scheme. Among the amendments that she proposes in the legal procedure is that cases should be set for hearing within fifteen (15) days from receipt of the application.  However, amendments to the process need to be deliberated and approved en banc.

The ERC will be submitting its recommendation to fast-track the pending applications of PSALM for the recovery of Stranded Debts (SDs) and Stranded Contract Costs (SCCs) to the Senate Committee on Energy with the following proposed timeframes, provided that there is already a quorum:

(1)    For cases that are submitted for resolution – One (1) month to complete the evaluation and another one (1) month for deliberation and promulgation; and

(2)    For cases still undergoing hearings - One (1) month to complete the evaluation (upon termination of the hearings) and another one (1) month for deliberation and promulgation.
“While waiting to have a quorum in the Commission, I have directed the staff involved to have all the details and documents needed ready to facilitate the resolution of the subject PSALM applications as soon as a quorum is achieved.  We support the Senate Committee on Energy’s move to look into the possibility of tapping the Malampaya funds for the recovery of stranded debts and stranded contract costs, including the attendant costs thereof, instead of passing on the same to the electricity consumers nationwide, so as not to put additional burden on them,” Chair Devanadera added.


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