Finding logic in all these

The PSA becomes a commitment. The obligation of GenCos and DU is to supply electricity with a fixed -price scheme for the noble objective of protecting consumers.

September 23, 2022

Let us not complicate the issue with technical and legal jargon, and let’s appraise it with common sense.

First, the perspective I’m taking is not easy to publish. Hence, there are not many media articles from the point of view I’m taking. Why? Simply because the entities involved are BIG advertisers.

Media networks not taking this side of the arguments is another point of discussion. Let’s respect the business side of media. And for that purpose, let’s not mention the names of these BIG advertisers. Let’s stick with the simple logic of the issue.

BIG advertisers involved are an Electricity Distribution Unit, which we will refer to as DU, and two Generation Companies (both owned by one GIANT company), which we will refer to as GenCos.

The issue concerns the Power Supply Agreements, which these two GenCos won via bidding last 2019. Two other GenCos also won PSA contracts in that bidding. Among many provisions in the contract is an electricity “fixed-price scheme,” a commitment that serves the welfare of the consumers as one essential benefit of PSAs.

These four winning GenCos are giants in the industry. Bids and contracts entered unto are combed through by logically well-equipped and well-compensated minds.

It’s a 10-year PSA contract, and these well-valued individuals will inject into their bids well-planned offerings that primarily protect the business plan of their respective GenCos and convincingly satisfy the contracting DU’s business plan, foremost is the welfare of their consumers.

The PSA becomes a commitment. The obligation of GenCos and DU is to supply electricity with a fixed-price scheme for the noble objective of protecting consumers.

Now the issue that somehow defies logic. Two GenCos’ both owned by the GIANT company appealing for “temporary relief” from their PSA commitment. Let’s not beat around the bush and be candid with some disturbing illogical facets of the situation.

First, the DU, which is logically being shortchanged for such a display of the inability of these two GenCos to abide by a commitment, is not happy with the unfaithfulness to the contract.

Then, there are four contracted GenCos. All four are in the same environment of economic challenges. It’s just the two sibling GenCos who are making the appeal. It’s common sense to think that the other non-appealing GenCos are better off than these two.

It’s common sense for the DU to be more on the side of consumers.

As the appeal is yet to be decided upon by the regulating body, it is perplexing that the GenCos sent Notices of Termination of the PSA contracts. Such audacity to do so while the regulator is yet to release the appeal resolution.

This is almost a display of disrespect. An appeal is a form of submission to the wisdom of the regulator. The resolution will be respected, for it will be derived from utmost review and consideration.

But that seems not to be the stance that these GenCos are showing. They’re flexing their vocal muscles by expressing that pending the regulator’s resolution, if logic prevails through a denied appeal, they’ll get what they want.

Now that’s logically a form of bullying, an arrogant stance to no less than the government, to the very consumers that collectively have enriched them. At present, the resolution is yet to be released, and one that seems insufficient to compel these two GenCos to be faithful to their PSA commitments.

So, let me hope that some logical response will be ethically considered with this looming NoT being muscled by the GenCos to the DU. I hope this DU will have the common sense to see the logic.

First, if new PSAs will be needed to fill the void, it is common sense and logic to exclude these two GenCos and their siblings from the same owner. Competence is compromised, so why even consider them for new PSA contracts?

Then most importantly, I firmly believe that these contracts, as usual agreements are drafted and finalized, logically contain certain conditions in the event of premature termination.

Contract termination provisions are present as protection of the contracting party, in this case, the DU. This is typically in the form of penalties and other forms of damages. By logical tendency, the DU must invoke this penalty clause to compel the imposing GenCos to abide.

In my opinion, to put some semblance of common sense to this appeal plagued with irrational approaches and stances, two scenarios — exclusion of these proven unworthy GenCos in the event of a new PSA contracting, and invoking of the termination penalty clause — must simply follow the critical use of common sense in sorting things out.

That, for me, is finding logic in all these.


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