OSG opposes consolidation of SMC PSA cases


The Office of the Solicitor General (OSG), being the representing counsel of the Energy Regulatory Commission (ERC), has opposed the consolidation of the cases to the denied rate hike on the power supply agreements (PSAs) of SMC Global Power Holdings Corp. 

This follows the previous decision of the 16th division of the Court of Appeals, which partially granted the petition of San Miguel Corporation (SMC) subsidiary San Miguel Energy Corporation (SMEC) to consolidate its case with the petition of South Premiere Power Corporation (SPPC) that’s currently pending with the CA 13th division. 

In a report by the Manila Bulletin, ERC Chairperson Monalisa Dimalanta said that the OSG has filed a partial motion for reconsideration on the consolidation, “In a way, [the OSG] opposed the consolidation.” 

SMCGP and the Manila Electric Co. (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 petitions, however, were both denied by the ERC. 

Dimalanta said that the OSG’s opposition argues that while the petitions of the two SMC firms are both rooted in the change in circumstances (CIC) provisions of the PSAs, the events affecting the two contracts have been seen to be legally divergent in nature. 

CICs, as stated in the PSAs, is “any law coming into effect after the signing of (the) agreement, including the adoption or enactment, or any change or repeal with respect to the imposition of taxes, duties, levies, fees, charges or similar impositions, and the right to remit or convert currencies…”

With regards to the SPPC deal, Dimalanta said that the question raised was “a change in law due to the gas restriction on the Malampaya” as issued by the National Power Corporation (NPC) as the original state-run counterparty in the gas supply and purchase agreement (GSPA) for the Ilijan plant. 

As for the SMEC PSA, the ERC official said that this was linked to “change in economic conditions” citing the surge in coal prices due to the Russia-Ukraine war.