SMC Global Power’s Php 34B Rate Recovery Request Under ERC Review

San Miguel Global Power Holdings Corp. is seeking to recover Php34 billion from Meralco customers after securing a favorable Supreme Court ruling on its petition for a rate adjustment under its power supply agreements (PSAs). The Energy Regulatory Commission (ERC) is now reviewing the request to determine its compliance with regulatory standards and its potential impact on consumers.

ERC chairperson Monalisa Dimalanta, at the sidelines of the Energy Efficiency Day Forum on Thursday, said SMC Global Power filed two motions before the Commission—one to recover Php 5 billion in losses and another petition to recover Php 29 billion.

Dimalanta said the Php 5 billion is for the period March to May 2022, while the Php 29 billion is for the period May to December 2022. Of the Php 29 billion, Php 13.36 billion covers San Miguel Energy Corp. (SMEC, now Sual Power Inc.) for May to July 2022, while Php15.85 billion applies to South Premiere Power Corp. (SPPC) for May to December 2022. Both of which, she said, remain under evaluation.

“Fundamentally, we have to make sure that the claim has a basis under the PSA and is justified by supporting documents. Even though the Supreme Court, affirming the Court of Appeals, gave the go signal for the first period, I’m sure they do not expect us to simply approve a blank check without verification. We need to ensure that all requirements are met,” Dimalanta said.

The dispute began in May 2022 when SMC Global Power subsidiaries SPPC and SMEC (now Sual Power Inc.)—which operate the Ilijan gas-fired power plant in Batangas and the Sual coal-fired power plant in Pangasinan—jointly filed a petition with Meralco for a temporary rate adjustment. They argued that unforeseen increases in fuel costs due to Russia’s invasion of Ukraine constituted a “change in circumstances” that warranted an amendment to their fixed-rate contracts.

The ERC denied the request in September 2022, ruling that PSAs could not be retroactively adjusted based on fuel price volatility. This led SPPC to elevate the matter to the Court of Appeals (CA), which later issued a preliminary injunction in January 2023, allowing a renegotiation of the contract terms.

The case eventually reached the Supreme Court, which upheld the CA’s ruling and dismissed the ERC’s appeal, effectively allowing SMC Global Power to recover costs under the “change in circumstance” clause.

What’s your take on this rate adjustment? Should the ERC approve the recovery request, or should further safeguards be put in place? Share your thoughts below.