Appeals court grants SMC's TRO plea vs. ERC
Power Energy

Appeals court grants SMC's TRO plea vs. ERC

Nov 26, 2022, 7:58 AM
Rose De La Cruz

Rose De La Cruz


The Court of Appeals has granted San Miguel Corp.’s power subsidiary, a 60-day reprieve from the ruling of the Energy Regulatory Commission that denied its plea for price adjustments to offset losses it incurred from the power supply agreement with Meralco.

Billionaire Ramon S. Ang’s plea for a 60-day temporary restraining order against the Energy Regulatory Commission’s suspension of the power supply agreement between his subsidiary South Premier Power Corp. and Meralco. This is San Miguel’s first major win in trying to get price adjustment.

The CA granted SPPC’s petition for a temporary restraining order on the ERC’s decision last September 29, denying its joint motion with Meralco for price adjustment. The TRO shall be effective for a period of 60 days, business blog site, Bilyonaryo quoted the CA ruling.

In its motion for reconsideration filed with the CA, SPPC claimed that ERC acted with grave abuse of discretion in denying its rate increase petition which was intended to stem the losses from the 10-year fixed price supply contract it entered with Meralco in 2019.

SPPC also explained that it elevated its case to the CA as it could not afford to wait for the ERC’s final action given the huge losses it had incurred from 2021 to date amid skyrocketing global coal prices and natural gas supply restrictions from the Malampaya gas field.

It asked the CA to grant the rate petition

“without prejudice to any further requests for price adjustments for June 2022 onwards.”

ERC, meanwhile, said it denied SPPC’s plea for a price increase since the regulatory body ruled that the agreed price in the PSA is fixed in nature, and the grounds for increase cited by SPPC and MERALCO were not among the exceptions that would allow for price adjustment.

Monalisa Dimalanta, ERC chair and a former official of Aboitiz Power, expressed grave concern on the instantaneous effect of the temporary suspension on the implementation of the PSA based on the TRO.

She said this would consequently expose approximately 7.5 million registered MERALCO consumers in the National Capital Region and other areas in Region III and IV to higher electricity prices without preparation usually observed in case of PSA termination.

“The fixed price PSA of MERALCO with SPPC covers 670 megawatts of supply. This, along with the other fixed price PSAs, have been shielding MERALCO consumers for the past several months from the volatility of prices from WESM and automatic fuel pass-through PSAs.
If these PSAs are immediately suspended, this brings us precisely to the situation which we at the ERC have sought to avoid with our ruling that required the proper observance of the terms of the PSA, including the contractually- agreed process of termination,” Dimalanta said.

This move could in turn lead to a spike in the monthly power bills of Meralco customers, a concern raised by the Energy Regulatory Commission. In a statement on Friday, the ERC said the 14th Division of the CA issued a TRO in favor of South Premiere Power Corp.

The ERC cited a portion of the CA ruling dated Nov. 23: “… in view of the circumstances and the interest of the general public, this court grants the TRO and hereby suspends the implementation of the PSA (power supply agreement).”

Higher prices

The TRO request stemmed from the ERC’s rejection of the joint SMC-Meralco petition for a rate increase to offset soaring coal and fuel prices from Russia’s invasion of Ukraine.

In a disclosure on Friday, SMC said the 17th Division of the CA is yet to decide on the petition for certiorari separately filed by San Miguel Energy Corp. (SMEC).

Nonetheless, the ERC expressed confidence that the CA

“will accord great respect, if not finality, to the regulator’s factual findings because of its special expertise over the energy sector.”

For its part, Meralco said it would consult its counsel to explore the next steps in light of the CA decision and will follow up with the Department of Energy (DOE) on its prior request to immediately secure additional power supply without going through a competitive selection process (CSP).

“We have also written the DOE to follow up on our previous letter requesting for CSP exemption of certain emergency PSAs that are ready to be implemented to shield our customers against volatile and potentially higher WESM prices,” said Jose Ronald Valles, first vice president and head of Regulatory Management of Meralco.

Consumer group protests TRO

Consumer group Power for People Coalition (P4P), meanwhile, lambasted the CA for what it described as an “illogical and anti-consumer” resolution on the issue.

“The TRO is absurd and rash. It suspended the PSA between SMC and Meralco, which governs how SMC can supply Meralco with electricity and how much SMC can charge,” Gerry Arances, P4P convener, said in a statement.

Tags: #CA, #SMC, #ERC, #TRO

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