ERC starts deliberations on SMC rate hike petition
By Alena Mae S. Flores September 20, 2022, 6:50 pm
from manilastandard.net
The commission en banc of the Energy Regulatory Commission started deliberations on the temporary relief filed by San Miguel Corp. and Manila Electric Co. on their 2019 power supply agreements.
SMC, through South Premiere Power Corp. and San Miguel Energy Corp., administrators of the 1,200-megawatt Ilijan natural gas and 1,200-MW Sual coal-fired power plants, along with Meralco, filed their respective petitions for a temporary rate hike of P0.30 per kilowatt-hour over six months.
ERC chairperson Monalisa Dimalanta said following the deadline for the submission of comments on Monday, the regulator would start deliberations.
ERC commissioner Floresinda Digal confirmed the case was submitted for resolution on Tuesday “but deliberations may take not just one deliberation.”
Dimalanta said the commission would come out with its decision before Oct. 4, the date indicated by SMC in its letter to Meralco seeking to terminate the supply deals.
Dimalanta assured a “fair and transparent” evaluation of SMC and Meralco’s application for temporary relief on the supply agreements.
SMC asked the ERC for a fair and objective assessment of its petition in the wake of the record rise in global fuel prices driven by economic and geopolitical forces.
“We know any price increase is unpopular, and normally we never ask for one―which is what we did for all of last year when we absorbed expanding costs that we do not pass on to consumers. The war in Ukraine has taken prices far beyond what we and Meralco could have even imagined in 2019 when we signed the PSAs. At the time, the forecast for coal was only $65 per metric ton for ten years. Now it is already at $400 per MT,” SMC president Ramon Ang said earlier.
Meralco warned that consumers would be burdened by as much as P25.8 billion if it was forced to secure new PSAs to replace those of SMC.
It said consumers might have to shoulder an additional P1.6 billion for one month if the PSAs with SMC was terminated and forced to purchase from the spot market.
Meralco said consumers would also have to shell out an additional P12.6 billion if it would conduct a competitive selection process for a one-year replacement contract and P25.8 billion if the contract would be until 2029.
Meralco said it might be forced to immediately procure power from the Wholesale Electricity Spot Market if the PSAs were terminated, or the petitions of SMC would not be approved by Oct. 4.
SMC said the temporary rate hike would allow the Sual and Ilijan facilities to recover some P5 billion in losses, ensure their fixed-rate PSAs are maintained over the longer term and continue to mitigate the soaring cost of electricity for consumers.
Ang said the PSAs with Meralco help keep electricity low for consumers, as they are among the last fixed-rate power supply agreements that do not pass on additional costs.
“We just hope the ERC will not merely try to prevent a temporary increase but will take a whole-of-industry approach. No company or business can sustain operations with this unprecedented and continuing rise in costs. These power plants account for 25 percent of the net reliable capacity of the Luzon grid. They are a major part of the country’s already fragile power supply. We ask that in this time of extraordinary circumstance and difficulty, please, let’s not cripple them,” Ang said.
