The Power Sector Assets and Liabilities Management Corporation (PSALM) is batting to recover from Filipino electricity consumers a monstrous half-a-trillion peso worth of stranded debts, but it refuses to submit to the Energy Regulatory Commission (ERC) required loan documents that could justify the level of rate recoveries it has been proposing.

In a motion it filed with the ERC, PSALM plainly cited “confidential treatment of the loan documents” as its ground for defying the order of the Commission on the loan agreements’ submission.

The liability management firm argued that it cannot be compelled to submit the loan documents “considering that the contents of these loan agreements are not an issue in the instant petition…” and considering further “that some of these documents have confidential provisions.”

The calculated stranded debts of PSALM which it wants to pass on via the electricity bills as universal charge items would be a staggering P471 billion as of 2009. Its debt level has been rising though because it went on new rounds of borrowing frenzy in the past two years.

In the inventory of performance and cash levels of government-run energy agencies and corporations, PSALM is among those proposed to be given stringent scrutiny; given that, while it cornered billions in privatization proceeds, it wasn’t successful in retiring bulk of National Power Corporation’s debts. Instead, it bloated loan obligations to new highs of $8.0 billion, higher than when NPC was still a monopoly.

Most of the divested generating assets were paid mostly by their private buyers in full; while revenues from the Independent Power Producer Administrators (IPPAs) will come in over time, as these are back-ended and will not flow in immediately to pay down stranded debts.

However, it was pointed out that the new administration or the incoming leadership at PSALM needs to match those cash flows with the debt flows to see how much is really being offset on the debt payments. Fears are being raised that the universal charge will be set at a rate to pay all debts and the monthly payments from the IPPAs will be going elsewhere, which is not consistent with the provisions of the Electric Power Industry Reform Act.

For the first installment, PSALM already filed an application to recoup about P1.06 per kilowatt hour (kWh) from consumers for costs relating to its stranded debts and contractual obligations. This recovery alone entailed a whopping P81 billion for just one year.

In the future, electricity consumers will see their bills bloat further and part of the future “heavy” burden will be the universal charges from PSALM’s stranded liabilities.

The ERC noted it has yet to act on PSALM’s motion on the confidential treatment of the loan documents. The overarching call on the regulator though is to be prudent in assessing the rate recovery filing of the company, especially since it is not too willing to submit evidence to back its claims.