The Court of Appeals (CA) sided with San Miguel Corp. on cases involving power supply agreements (PSA) between its subsidiaries and the Manila Electric Co. (Meralco), the company said in a disclosure to the Philippine Stock Exchange.
But Meralco in a statement said this does not mean the PSAs between the parties are now restored to implementation.
SMC said the CA annulled and set aside the orders of the Energy Regulatory Commission (ERC) rejecting the temporary rate hike petition filed by units San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC) last year.
The CA cited “grave abuse of discretion amounting to lack or excess of jurisdiction” in nullifying ERC’s orders.
The CA also granted SMEC and SPPC’s joint motion for price adjustment with provisional authority and/or interim relief “without prejudice to any further requests for price adjustments for June 2022 onwards for SPPC from June 2022 to Jan. 25, 2023 and for SMEC from June 2022 to the date of the finality of the joint decision.”
In a separate statement, Jose Ronald Valles, Meralco first vice president and head of regulatory management, said CA’s decision upheld the position taken by SPPC and SMEC and Meralco during the hearings at the ERC that the grant of the fuel price adjustment is the least cost option for customers rather than buying replacement power from the Wholesale Electricity Spot Market (WESM) or other suppliers.
However, Valles said “there are some matters in the decision that we feel need to be clarified.”
He did not elaborate.
“We are consulting with our lawyers on the legal remedies available to us, including an appeal to the Supreme Court. To ensure continuity of supply of electricity to our customers and avoid exposure to volatile WESM prices, we shall also start negotiating with power suppliers for emergency power supply agreement to replace any capacity that we might lose if SMEC terminates its PSA with Meralco as a result of the CA decision,” Valles said.
In 2019, Meralco conducted a competitive selection process wherein SMEC secured a deal to supply the distributor with 330 megawatts (MW) of electricity at all-in headline rate of P4.6314 per kilowatt hour (kWh) while SPPC joined for 670 MW at an all-in headline rate of P4.6314 per kWh.
Both contracts were for baseload supply of electricity or power that is needed 24×7 and was made effective Dec.26, 2019 for a term of 10 years.
However, the PSAs were put on hold pending court decisions on how they will be implemented after the ERC denied the joint request of SMC and Meralco last year for the temporary rate hike of the said contracts.
