SMC Global seeking rate hike after Php15B losses on fuel costs

smc global power edited

The SMC Global Power Holdings Corp. (SMCGP), the power arm of the San Miguel Corporation, has asked the Energy Regulatory Commission (ERC) for a power rate hike to partially recover costs amid losses from its two operating power plants. 

SMCGP said that it incurred a Php 15 billion loss on the electricity generation operation of the 1,200 megawatt (MW) Sual plant and the 1,200 MW Ilijan power plant due to high global coal prices and natural gas supply restrictions from the Malampaya Gas Field. 

Of the total amount, SMGCP will absorb the Php 10 billion, while the remaining amount will be recovered with a proposed rate hike via its power supply agreements (PSAs) with the Manila Electric Co. (MERALCO). 

The San Miguel unit 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. 

SMCGP said that it is only seeking “temporary and partial cost recovery relief for the losses it incurred from January to May 2022” totaling Php 5.2 billion “in the form of a rate increase on its contract capacity under the PSAs to be amortized over a period of six months. “

In a statement, SMC said that the rate impact on MERALCO would only be Php0.28 per kWh over a period of six months, should the ERC grant the cost recovery claim. 

SMC said that the rate hike “would allow power generation facilities to continue sourcing the necessary fuel and allow it to viably operate and supply power.” 

The affected PSAs were approved by the ERC in 2019. 

South Premiere Power Corp. (SPPC), the independent power producer (IPP) of the Ilijan plant, is supplying 670MW to MERALCO for 10 years from December 26, 2019 to December 25, 2029. Meanwhile, San Miguel Energy Corp. (SMEC) is the IPP of the Sual pant and is also supplying 330 MW to MERALCO in the same period. 

SMC President and CEO Ramon Ang said that average coal prices in the first half of the year were at $176 per MT versus $99/MT in the first half of 2021. The average coal price in 2019 and 2020 was only $69/MT.