Watchdog backs ERC appeal on Meralco-SMC deals

By Alena Mae S. Flores – May 8, 2024, 8:40 pm
from manilastandard.net

The watchdog group Power for People Coalition (P4P) expressed support for the move by the Energy Regulatory Commission (ERC) to appeal before the Supreme Court (SC) the decision of the Court of Appeals (CA) that allowed two power generating arms of San Miguel Corp. (SMC) to walk out on power supply deals with Meralco that have set fixed rates.

SMC last year won a ruling from the CA which reversed the ERC decision denying its petition to raise prices from its Ilijan gas and Sual coal power plants, despite both being covered by fixed-rate power supply agreements (PSAs).

The Office of the Solicitor General confirmed that the ERC filed an appeal on Feb. 29 this year.

“We welcome the move of the ERC and its chair, Monalisa Dimalanta, to uphold its duty of protecting consumers from the attempt by SMC to profit off the rising price of coal and gas by passing them on to consumers,” said P4P convenor Gerry Arances.

“We hope the Supreme Court will see reason and rule that SMC must abide by its contract and cannot raise prices on electricity,” Arances said.

SMC sought to collect an extra P5 billion from consumers in 2023 in a petition before the ERC to raise prices, which was denied due to the clause in the contract which prohibited changes in rates.

“Those PSAs protected consumers in the Meralco franchise area from the ludicrous spike in electricity prices which plagued customers of other distribution utilities in the country at that time,” Arances said.

In siding with SMC, the CA committed a grave disservice to consumers, exposing them to higher electricity prices even when protected by a contract,” said Arances.

The Ilijan gas plant is now trying to get a new PSA with Meralco approved by the ERC, but at higher prices.

“If SMC is able to secure a new PSA for Ilijan, it will signal that generation companies can jack up prices with impunity and render power supply agreements moot,” the P4P leader said.

“With temperatures rising, consumers will be at the mercy of the power company, a situation that the SC must recognize and prevent by supporting the position of the ERC,” said Arances.

The CA 13th Division in June 2023 ruled against the ERC decision to junk the ilijan and Sual plant owners’ bid to raise rates to recoup losses due to rising fuel prices.

The same CA division affirmed its June 2023 decision in December of the same year, prompting the ERC, through the OSG, to bring the case to the Supreme Court.