The Energy Regulatory Commission (ERC) has rejected the rate hike plea of the San Miguel Corp.’s (SMC) power units and the Manila Electric Co. (MERALCO).
“After due deliberation and thorough evaluation of all arguments submitted and all information gathered by the Commission pursuant to its regulatory powers, the Commission denies applicants’ joint motion for price adjustment,” the ERC said in an order dated September 29, but only made public on Monday night.
SMC’s power arm SMC Global Power Holdings Corporation (SMCGP), and MERALCO filed for a power rate hike in their power supply agreements (PSAs) after incurring a Php15 billion loss amid high global prices and natural gas supply restrictions.
“The fixed price nature of the subject PSA is meant precisely to protect consumers from market volatilities, such risks being assumed by the supplier,” the ERC stressed. “The commission, therefore, cannot afford relief to any party for its miscalculations, imprudence, or inadvertence, at the cost of consumers.”
ERC added that MERALCO, under its franchise and Republic Act. 9136 must provide electricity to its consumers in the least cost manner.
SMCGP said that it may terminate its two PSAs with MERALCO today, October 4, if no relief would be given by the ERC.
San Miguel subsidiaries South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC) are the independent power producers (IPP) of the 1,200-megawatt (MW) Ilijan power plant, and the 1,200 MW Sual power plant, respectively. Both units have existing PSAs with MERALCO.
SMCGP has applied for a Php 0.80 per kilowatt hour (kWh) hike for the 670-MW contracted capacity of the Ilijan plant, going from Php 4.30/kwh to Php 5.10/kWh. It also applied for an average Php4/kWh increase for the 300 MW contracted capacity of the Sual plant, going from Php4.30/kWh to as much as Php8.30/kWh.
“The subject PSA does not require SPPC to exclusively supply from the Ilijan Power Plant as it is a financial contract, as represented by Applicants themselves and clearly discussed in the Commission’s orders.” ERC noted.
The San Miguel units earlier warned that power prices may increase by as much as 30% beginning October should the PSAs be terminated.