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Payment terms fleshed out for P11.57-B WESM collectibles

Around 40 parties, including the Manila Electric Company (Meralco), have agreed in principle on the terms that will bind them on the P11.568 billion that must be collected back by the Philippine Electricity Market Corporation (PEMC) due to a regulatory ruling reducing the rates of the Wholesale Electricity Spot Market (WESM) for November-December 2013 supply months.

“They came to an agreement on the terms of payment and signing of the special payment arrangement has also been agreed upon,” Energy Secretary Carlos Jericho L. Petilla has disclosed in an exclusive interview.

Of the total amount of P11.568 billion, it was emphasized that around P1.789 billion represented “the imbalance between the amounts to be collected and paid” under the March 3 order of the Energy Regulatory Commission.

Under the latest copy of the payment term sheet, the parties specified that the amount of settlement or pay-back to PEMC shall be subject to the approval of the ERC. The portended WESM collection may eventually reflect in the electric bills as refund to consumers.

The latest June 9, 2014 decision of the ERC, however, indicated that settlement of the estimated amounts on WESM adjusted rates shall be “held in abeyance” due to the motion for intervention filed by Angeles Electric Corporation.

Petilla explained that parties which will not sign the agreement could seek legal recourse so they could be spared from disconnection or getting barred from trading into the spot market or on forced payments out of their prudential guarantee with the WESM.

San Miguel Energy Corporation (SMEC), according to Petilla, has already sounded off that it will not sign the agreement but it will be elevating its case to a higher court.

Willing parties are bound to pay in “equal monthly amortizations in 6 months or 24 months, at the option of the payor.” It was further prescribed that “all payors shall provide written notice to PEMC as regards the option they have chosen before 20 June 2014.”

In the case of the Power Sector Assets and Liabilities Management Corporation (PSALM), it had committed to pay “the full amount of its proportionate share on 25 June 2014.”

The term sheet further provides that “payors may voluntarily pre-pay any principal amount to shorten the monthly amortization period or reduce the monthly amortization amount.”

Interest charges on the total amount due shall be anchored on “the 91-day Treasury bill as of June 9, 2014, plus 200-basis points or 3.44% per annum for those who opt to pay for the 24-month amortization, and zero-percent for those who opt for the six-month amortization.”

For the calculated imbalance of P1.789 billion, the amount was agreed to “be paid upon, and subject to, the final disposition of the pending cases before the ERC, Court of Appeals and the Supreme Court.