Higher power rates in the offing as ERC rejects SMC-Meralco’s petition

Consumers will face higher electricity rates following the denial by the Energy Regulatory Commission of the petition of ultra bilyonaryo Ramon S. Ang’s San Miguel Corp. and Manny V. Pangilinan-led Manila Electric Co. (Meralco) for a temporary rate hike.

SMC sought a rate increase for the combined capacities supplied by its Sual coal plant and Ilijan natural gas facility to Meralco to shield consumers from unjustifiably high prices over the long-term.

The decision released Monday night was signed by ERC chairperson Monalisa Dimalanta, Floresinda Digal, Marko Romeo Fuentes, Catherine Maceda and Alexis Lumbatan.

Fuentes and Lumbatan issued dissenting opinions, saying the motion should be granted as the PSA allows SMC and Meralco to claim a temporary price adjustment for a specific period based on a change in circumstance (CIC).

“A denial of the joint motion for price adjustment would expose the consumers to unknown and even higher rates than granting the same, not only in the near term but until 2029,” Fuentes and Lumbatan said.

Non-government groups and cause-oriented groups hailed the ERC’s decision to deny the Meralco-SPC petition for relief, which would raise rates by only P0.30 per kilowatthour over a six-month period.

However, Meralco warned that it would be forced to tap other suppliers such as other generators and the electricity spot market to address the supply gap of the 2019 PSA.

Meralco and SMC filed a petition seeking for a temporary relief due to change in circumstances (CIC) but ERC said the grounds invoked by the parties do not fall within the definition of CIC under the PSA.

According to ERC, the fixed price nature of the subject PSA is meant to protect consumers from market volatilities such as risks assumed by the supplier.

ERC said Meralco and SMC were aware of the risks of entering into a fixed price PSA for 10 years.

The agency also claimed that its computations on the impact of replacement power from the Wholesale Electricity Spot Market (WESM) was lower by P1.2745 per kWh than the computation of Meralco.

ERC also said the termination of the contract could only take effect 60 days after the denial of the motion although SMC announced it would terminate the PSA by Oct. 4 if it does not receive a favorable ruling from ERC.