By J. MONTEMAYOR and J. MACAPAGAL
President Marcos Jr. is hopeful that the Court of Appeals (CA) would reconsider its “unfortunate” decision suspending the power supply agreement (PSA) between the Manila Electric Company (Meralco) and San Miguel Corp.’s subsidiary South Premier Power Corp. (SPPC) as it could mean continued higher electricity rates.
The President, in a press release issued by the Office of the Press Secretary, said:
“The implementation of the PSA between Meralco and San Miguel it is unfortunate that this has happened, …it will cause further dislocations and possible price increase for power. We hope the CA will reconsider. And include in their deliberations the extremely deleterious effect this will have on power prices for ordinary Filipinos.”
The CA 14th Division issued a 60-day TRO in favor of SPPC, which made the appeal after the Energy Regulatory Commission (ERC) ruled that agreed price in PSA is fixed in nature and the grounds for increase cited by SPPC and Meralco were not among the exceptions that would allow for price adjustment.
The Manila Electric Co. (Meralco) meanwhile is seeking the approval of the Department of Energy (DOE) on the exemption from the conduct of competitive selection process (CSP) certain power supply agreements (PSAs) to shield customers against volatile prices in the Wholesale Electricity Spot Market (WESM).
Meralco sought the exemption following the issuance of the TRO.
“We already received the official copy of the TRO on the PSA between Meralco and SPPC. We are reviewing the resolution in consultation with our counsel to determine the next steps. We have also written the DOE to follow up on our previous letter requesting for CSP exemption of certain emergency PSAs that are ready to be implemented to shield our customers against volatile and potentially higher WESM prices,” said Jose Ronald Valles, Meralco first vice president and head of regulatory management, in a statement last Friday.
CSP is the bidding for the procurement of the cheapest source of power before an agreement can be made and approved by regulator.
The joint request of Meralco and SPPC with the ERC sought for a temporary and partial cost recovery relief only for the losses incurred by SMC from January to May 2022, mainly due to the unprecedented spike in the cost of coal and natural gas — the types of fuel utilized by the company’s power plants to supply 1,000 megawatts (MW) worth of electricity to Meralco, including the capacity from SPPC.
Monalisa Dimalanta, ERC chair, expressed concern on the instantaneous effect of the TRO, citing it will expose approximately 7.5 million registered Meralco consumers in the National Capital Region and other areas in Central Luzon and Calabarzon to higher electricity prices without preparation usually observed in case of PSA termination.
“The fixed price PSA of Meralco with SPPC covers 670 MW of supply. This, along with the other fixed price PSAs, have been shielding Meralco consumers for the past several months from the volatility of prices from WESM and automatic fuel pass-through PSAs. If these PSAs are immediately suspended, this brings us precisely to the situation which we at the ERC have sought to avoid with our ruling that required the proper observance of the terms of the PSA, including the contractually-agreed process of termination,” Dimalanta said, in a statement.
Think tank Infrawatch PH said the President should allow “full judicial proceedings” to take its course as his views may be represented through ERC lawyers and the Solicitor General.
“The TRO will allow continuing discussions on the fair and reasonable rates which can be imposed on the Meralco franchise area given elevated fuel and coal prices in the last few months. This provides a way forward towards a determination on whether the price proposal in the joint petition constitutes as the least cost to consumers in comparison to other prospective proposals extraneous to the current power supply agreement, such as prices through emergency procurement or the spot market, said Terry Ridon, Infrawatch PH convenor, in a statement.
However, Ridon said the public must be ensured that the least cost principle will be followed by the CA.
Prior to the issuance of the TRO, SMC said it will not withhold its available power capacity to Meralco despite the ERC decision denying a joint request for a temporary power rate adjustment in view of fuel price spikes.
