SMC Global Power Corp. said it would explore other legal remedies to continue supplying power after the decision of the Energy Regulatory Commission (ERC) to deny its rate hike petition.
In a press release on Wednesday, the power arm of listed conglomerate San Miguel Corp. (SMC) said it would ensure that the energy supply to Manila Electric Co. (Meralco) will not be disrupted.
“We regret the ERC’s denial of our joint petition with Meralco for temporary relief on our 2019 power supply agreements (PSAs),” the company said.
On Monday, the ERC released its order denying the joint temporary rate hike sought by Meralco and SMC for the losses incurred by the latter’s two power plants.
SMC had sought the increase, citing a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the PSAs with Meralco.
In a separate release on Tuesday, Meralco said that it would comply with the ERC order and exert all available options to prevent the termination of its PSAs with SMC.
In August, SMC said that its units South Premiere Power Corp. and San Miguel Energy Corp., administrators of the Ilijan and Sual power plants, respectively, had issued notices of PSA termination to Meralco. It said the termination is effective starting Oct. 4 if the temporary relief is not given.
After the ERC ruling, SMC Global Power said the temporary relief would have allowed it to preserve the last remaining fixed-rate PSAs of Meralco that are keeping power rates in Metro Manila low, compared with other parts of the Philippines, amid the volatility of global fuel prices.
“We will never withhold our available power capacity to the detriment of the country and the consumers,” SMC Global Power added.
ERC Chairperson Monalisa C. Dimalanta said on Tuesday that the regulator denied the temporary increase because both Meralco and SMC had not exhausted all available options before filing a rate increase petition.
Ms. Dimalanta added that SMC only submitted an unaudited financial statement to support its claim that its two power plants suffered losses, which the company placed at P15 billion.
She said SMC should follow what is in the PSAs, which set 60 days before it can terminate the supply deal after the receipt of the ERC decision.
“They should follow the contract because the contract itself is the one that set the period, it’s a fixed price financial contract,” she added.
SMC earlier said that the losses, of which it was trying to recover P5 billion through the rate increase, were caused by a “change in circumstance,” including supply disruptions triggered by a coal export ban, Russia’s war on Ukraine, and value chain issues triggered by the pandemic.
Had the ERC approved the petition for temporary relief, SMC said electricity prices in Luzon would go up by only 30 centavos per kilowatt-hour over a period of six months. It previously warned that a denial of the petition might result in a 30% increase in electricity prices.
On Wednesday, shares in SMC rose by P2.35 or 2.43% to close at P99 apiece. — Ashley Erika O. Jose