SMC: Supreme Court junks ERC appeal on power deals
By Lenie Lectura – September 4, 2024
from Business Mirror
San Miguel Corp. (SMC) said Tuesday the Supreme Court (SC) denied with finality an appeal filed by the Energy Regulatory Commission (ERC) against the power supply agreements (PSAs) it forged with the Manila Electric Co. (Meralco).
The SC decision effectively junked an order that did not allow the power units of the conglomerate to invoke the “change in circumstance” (CIC) in terminating its PSAs with Meralco.
“(SMC) received yesterday afternoon, September 2, 2024, through Poblador Bautista and Reyes Law Offices, the counsel of South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC), a copy of the Resolution issued by the First Division of the Supreme Court dated July 10, 2024, which denied with finality the ERC’s motion for reconsideration of the Court’s April 3, 2024 Resolution as well as its prayer for issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction for lack of merit,” SMC’s disclosure read.
The SC found “no substantial argument to warrant a modification of this Court’s resolution, the Court further resolved to deny reconsideration with finality.”
When sought for comment, ERC Commissioner Monalisa Dimalanta said her office will consult with government lawyers on how to go about the SC decision. For now, she said, the commission has yet to receive a copy of the SC ruling.
It can be recalled that the ERC did not allow the temporary rate relief petitions jointly filed by Meralco, SPPC and SMEC. They were supposed to implement a fixed-rate over a period of 10 years but SPPC and SMEC cited CIC in their previously approved power rates stated in their 2019 PSAs with Meralco.
The joint plea cited the “change in circumstance” provisions in their PSAs. They argued that the global increases in fuel and coal prices have led to SPPC and SMEC incurring significant losses in operating their power stations that justify their proposed rate increases.
SMC said the power plants have already posted staggering losses of P15 billion and it had already absorbed more than P10 billion.
The ERC ruled that SMC could not invoke CIC. After which, SMC brought the case to the Court of Appeals (CA), which later on reversed ERC’s ruling. The ERC then filed an appeal with the SC.
Dimalanta said the role of the regulator is “always a balancing act.”
“The Commission deliberated on many occasions on these Joint Motions fully conscious that the consequences of the ruling go beyond the businesses of the immediate parties but will extend further and demonstrate how we, in the Philippine power industry, honor the sanctity of contracts, uphold the results of bidding process, and hold ourselves accountable to all stakeholders.”
As of press time, SMC did not say if it will pursue the collection of the amounts it claimed before as due to CIC.
For the ERC’s part, Dimalanta said her office will “study again” the implications of the CA decision, “if that is contemplated.”
