The Energy Regulatory Commission (ERC) has released new guidelines regarding the termination of power supply agreements (PSAs), explicitly stating that the longstop date provision will no longer be accepted as a valid reason for unilateral contract pre-termination.
In a report by Manila Bulletin, the “longstop date” refers to the deadline by which approval for a PSA must be issued after all contractual conditions have been met.
The ERC has set a maximum timeframe of 270 days, or nine months, for regulatory approval.
This ruling stems from the joint applications of Manila Electric Company (MERALCO) and its supplier-partners—GNPower Dinginin Ltd. Co., Mariveles Power Generation Corporation, and Excellent Energy Resources Inc. (EERI), a partnership among San Miguel, Aboitiz Power, and Meralco PowerGen.
ERC chairperson Monalisa C. Dimalanta emphasized that none of the pending PSAs with MERALCO sought pre-termination based on the longstop date. This new ruling will guide similar contracts seeking ERC approvals in the future.
Previously, the expiration of the longstop date had been used as a legal basis for the March 2023 termination of MERALCO’s contract with EERI, which was for a capacity delivery of 1,800 megawatts.
The ERC’s recent decision clarifies that, according to Section 13(e) of the Energy Virtual One-Stop Shop (EVOSS) Act (Republic Act 11234), the ERC has 270 calendar days to act on a valid application submission. Since the MERALCO PSAs did not include a request for provisional authority (PA), which should have been acted upon within 75 days, the final approval timeline will follow the 270-day period prescribed by EVOSS.
Furthermore, the ERC reminded MERALCO and its supplier-generation companies that, under Section 34 of the EVOSS law, contract termination within the validity period is not permitted unless expressly allowed under the guidelines.
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