The Court of Appeals has issued a temporary restraining order suspending the implementation of the power supply agreement (PSA) between San Miguel Corp. subsidiary South Premier Power Corp. (SPPC) and Manila Electric Company (Meralco).
The CA granted SPPC’s petition for a temporary restraining order on the ERC’s decision last September 29, denying its joint motion with Meraco for price adjustment. The TRO shall be effective for a period of 60 days, the CA said.
In its motion for reconsideration filed with the CA, SPPC claimed that ERC acted with grave abuse of discretion in denying its rate increase petition which was intended to stem the losses from the 10-year fixed price supply contract it entered into with Meralco in 2019.
SPPC also explained that it elevated its case to the CA as it could not afford to wait for the ERC’s final action given the huge losses it had incurred from 2021 to date amid skyrocketing global coal prices and natural gas supply restrictions from the Malampaya gas field.
It asked the CA to grant the rate petition “without prejudice to any further requests for price adjustments for June 2022 onwards.”
ERC, meanwhile, said it denied SPPC’s plea for a price increase since the regulatory body ruled that the agreed price in the PSA is fixed in nature, and the grounds for increase cited by SPPC and MERALCO were not among the exceptions that would allow for price adjustment.
Monalisa Dimalanta, ERC chairperson and a former official of Aboitiz Power, expressed grave concern on the instantaneous effect of the temporary suspension on the implementation of the PSA based on the TRO.
She said this would consequently expose approximately 7.5 million registered MERALCO consumers in the National Capital Region and other areas in Region III and IV to higher electricity prices without preparation usually observed in case of PSA termination.
“The fixed price PSA of MERALCO with SPPC covers 670 megawatts of supply. This, along with the other fixed price PSAs, have been shielding MERALCO consumers for the past several months from the volatility of prices from WESM and automatic fuel pass-through PSAs.
If these PSAs are immediately suspended, this brings us precisely to the situation which we at the ERC have sought to avoid with our ruling that required the proper observance of the terms of the PSA, including the contractually-agreed process of termination,” Dimalanta said.