CA hands injunction on San Miguel PSA with MERALCO

CA facade June 26_5b3205c6687b84_52505762

The suspension of the power supply agreement (PSA) between San Miguel Corporation’s South Premiere Power Corporation (SPPC) remains in place. 

Court of Appeals (CA) 13th Division has granted the petition for a writ of a preliminary injunction filed by the SPPC. In a resolution dated January 25, Associate Justice Mary Charlene Hernandez said that the decision does not terminate the PSA but would allow the parties to negotiate the terms. 

The court has also ordered the San Miguel power company to post a Php 100 million bond “to answer for any and all damages which respondents may suffer or sustain” in relation to the issuance of the WPI. 

SPPC and MERALCO filed for a power hike rate in their PSA after incurring a Php 15 billion loss amid high global prices and natural gas supply restrictions. This petition, however, was denied by the Energy Regulatory Commission (ERC).

The CA decision added that the “continued implementation of the PSA where petitioner is compelled to bear the cost of energy supplied to the public on its own without any expectation of a reasonable return on its investments not only deprives the petitioner of its property without due process of law but also takes its private property for public use without just compensation.”

The CA said that if the companies would fail to reach an agreement within 60 days from the beginning of negotiations, SPPC would be entitled to terminate the PSA. 

Earlier this week, the CA also denied the petition for a temporary restraining order of San Miguel Energy Corporation (SMEC) on its 330 megawatt (MW) supply deal with MERALCO.