Left with no choice, ultra bilyonaryo Ramon S. Ang-led San Miguel Corp. (SMC) has decided to terminate its power supply agreement with Manila Electric Co. (Meralco) to stop incurring huge losses.
SMC power unit San Miguel Global Power has notified Meralco that it has terminated their deal covering the 670 megawatts of electricity coming from the 1,200-MW Ilijan power plant which is operated by SMGCP subsidiary South Premiere Power Corp. (SPPC).
The termination comes after the Court of Appeals issued a notice of resolution enjoining the Energy Regulatory Commission and Meralco from implementing ERC’s order denying the joint petition by SPPC and Meralco for temporary relief.
The cessation of supply covered by the resolution and TRO is immediately executory, according to SMC.
SMC president and chief executive officer Ramon S. Ang blamed the ERC for the termination, saying the company just wanted a temporary six-month relief to help mitigate continuing losses from soaring fuel prices.
“From the very start, we were very transparent and clear with the ERC: We were not asking for a permanent increase, we did not want to be relieved of our contractual commitments, we were just asking for temporary, equitable relief, given the undeniable and unforeseen circumstances that affect not just us, but all Filipinos and many economies worldwide,” Ang said
The SMC chief said it is unfortunate that the ERC still denied its petition despite being shown that granting its petition would have been the cheapest option for consumers.
“Fully-aware that this would force us to either continue absorbing significant losses–which no company can sustain–or terminate the PSAs, which would ultimately lead to higher electricity costs for consumers: much, much higher than what we were asking for,” he said.
Despite the cessation of supply of the contract capacity, SMGP said there would be no impact on current level of system supply because the company would still continue to offer its available and uncontracted capacity to qualified off takers and to the spot market.
To help consumers weather higher electricity costs, the company has also proposed to make the entire 1,200 MW capacity of the Ilijan plant available to Meralco at a minimal capital recovery fee of only P1.0 per kilowatt hour.
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