BY WENDELL VIGILIA and ASHZEL HACHERO
AN administration lawmaker has urged the Office of the Solicitor General (OSG) to appeal to the Supreme Court (SC) the ruling of the Court of Appeals nullifying the Energy Regulatory Commission’s (ERC) decision to deny petitions for power rate increase, saying the government has to exhaust all means to protect consumers who are already paying one of the most expensive electricity rates in the world.
Laguna Rep. Dan Fernandez, a vice chair of the House Committee on Energy, said the collection of higher power rates would further burden power consumers.
“We obviously cannot accept a situation where the CA decision becomes final simply because the ERC and OSG did not file its appeal or petition on time,” he said in his letter to Solicitor General Menardo Guevara last May 2, demanding that the OSG inform him in five days what action has been taken on the CA decision.
Fernandez, a stalwart of the National Unity Party (NUP), reminded ERC of its January vow to bring the case it lost in the CA to the High Court. “However, it is now May 2024 –more than four months from the CA decision – and I have not heard whether the ERC or the Office of the Solicitor General (OSG) has filed the needed appeal or petition,” he said.
“While demand for power supply is acute at this time, we also have the responsibility to protect consumers against price gouging,” Fernandez said. “There are ways to meet the demand that will not unduly and unreasonably raise power rates.”
The CA’s 13th Division ruled on June 27 last year that the ERC acted “with grave abuse of discretion amounting to lack or excess of jurisdiction” in junking the petitions of the Manila Electric Co. (Meralco), San Miguel Corp.’s subsidiary South Premiere Power Corp. (SPPC), and San Miguel Energy Corp. (SMEC) for a rate hike of P0.30 per kilowatt-hour (kWh).
To recall, the appellate court last year nullified the ERC’s ruling junking the joint petitions for rate hike that SMC and Meralco said will serve as temporary relief covering a combined P5.2 billion losses incurred from January to May 2022 due to the unprecedented increase in fuel prices.
In denying the petition for rate increase, the ERC said the agreed price in the PSA is fixed in nature, and the grounds for increase cited by the petitioners were not among the exceptions that would allow for the rate adjustment.
Both PSAs cover a supply period of 10 years from December 26, 2019 to December 25, 2029.
Under the said PSAs, South Premiere Power Corporation (SPPC) is mandated to supply power to Meralco 670 megawatt (MW) net baseload capacity, from the output of the 1,200 MW of Ilijan Power Plant, while San Miguel Energy Corporation (SMEC) is required to provide 330 MW to Meralco from the 1,200 MW Sual Power Plant in Pangasinan.
The ERC ruling resulted in the termination of the power supply agreements (PSAs) of Ilijan and Sual power plants with Meralco.
At the same time, Fernandez also urged the ERC to closely examine and withhold approval of the new PSAs between Meralco and the SMC-owned Ilijan (gas) and Sual (coal) generation firms.
“Indeed, the termination of the PSAs has apparently allowed llijan to bid again for Meralco’s long-term power requirements,” Fernandez said. “This is of major concern to my constituents and all other Filipinos, as it seems that San Miguel has simply substituted a contract that paid it cheaply for electricity for exactly the same contract but this time with a much higher price.”
Fernandez said the ERC cannot just approve another PSA between SMC and Meralco without filing an appeal with the High Court.
“I strongly urge the ERC to withhold approval of the new PSA between Meralco and SMC until after the Supreme Court resolves with finality the controversial power supply deals earlier decided by the appellate court’s 13th Division,” the lawmaker stressed.
SPPC and SMEC had entered into a 10-year agreement with Meralco in 2019 to supply 1,000 megawatts (MW) of capacity from the Ilijan gas-fired plant and the Sual coal-fired plant.
The headline rate of Meralco’s PSA with SMEC was P4.6314 per kWh, while its deal with SPPC pegged the rate at P4.2455 per kWh. In 2019, spot market prices averaged P8.47 per kWh.
In October 2022, both SPPC and SMEC issued termination notices to Meralco to suspend the PSA, citing unexpected and unprecedented “change in circumstance,” such as a surge in fuel costs.
The companies brought the case to the CA after their petition was junked by the ERC but on December 28 last year, the CA’s 13th Division affirmed with finality its decision overturning the ERC denial of the rate increase petitions by Meralco and the SMC subsidiaries.
