ERC majority junks joint bid of Meralco, SMC for rate hike 

THREE of the five Energy Regulatory Commission (ERC) commissioners denied the joint plea of San Miguel Corp.’s (SMC) power units and the Manila Electric Company (Meralco) for a rate increase in their previously approved power rates.

“The decision to deny the subject joint motion for price adjustment is in keeping with the Commission’s mandate to protect consumer interest, as provided for under the EPIRA,” said the ERC, referring to the Electric Power Industry Reform Act.

ERC Chairperson Monalisa Dimalanta, commissioners Catherine Maceda and Foresinda Digal are not in favor of the joint petition. Commissioners Alexis Lumbatan and Mark Romeo Fuentes issued their dissenting opinion.

The petitions of South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC) involved a temporary and partial cost recovery relief only for the losses incurred from January to May 2022, in the form of a rate increase on their contract capacities under the PSAs (power supply agreements) they entered into with Meralco, to be amortized over a period of six months. They initially pegged the temporary adjustment to only 30 centavos per kilowatt hour (kWh).

In particular, SPPC asked the ERC to increase the rate from P4.3 to 8.3/kwh for the 330 MW contracted baseload capacity by Meralco from the Sual plant, which runs on coal.

SMEC, meanwhile, is seeking a rate increase from P4.3 to P5.1/kwh for its 670 MW of contracted baseload capacity by Meralco from the Ilijan plant, which runs on gas.

The reasons for the rate hike include the surging prices of coal and of gas in the global market. The unilateral supply restrictions from the Malampaya gas field that fuels the Ilijan plant was another concern.

The power plants have already posted staggering losses of P15 billion and the companies have absorbed more than P10 billion of the losses that were incurred last year.

The commission said it “is not blind to the woes and difficulties faced by consumers and businesses alike, but it needs to rule and decide on the basis of what is clearly laid down in the PSA awarded pursuant to the CSP [Competitive Selection Process] policy, and in law.”

ERC added, “Preserving the PSA under the approved terms requires nothing less, thus ensuring respect for transparency, fairness and accountability.”

The ERC pointed out that Meralco and the SMC firms entered into the PSAs on their own free will, without pressure or intervention from anyone.

“Granting the price adjustment would render this Commission in contempt of the very PSA it approved which clearly provides no room for price adjustment, but which, to the contrary, guaranteed supply of energy to Meralco customers…at a fixed contract price provided under the PSA.

“The decision to deny the price adjustment is consistent with principles and mandate of the Commission in the EPIRA to guard against market abuse and to ensure transparent and reasonable prices of electricity in a regime and fair competition and full public accountability,” it said.