ERC rejects SMC-Meralco joint petition for rate hike

The Energy Regulatory Commission (ERC) has rejected the joint petition of San Miguel Corp. and Manila Electric Co. (Meralco) for a power rate hike.

In its 40-page decision, the ERC denied the joint motion for price adjustment filed by Meralco and South Premiere Power Corp. (SPPC)., a subsidiary of listed conglomerate SMC.

“As the regulatory body of the power industry, the Commission finds it necessary that applicants be reminded of their obligations under the PSA (power supply agreement) which they have entered into voluntarily. More importantly, the Commission emphasizes the responsibilities of Meralco under Republic Act No. 9136 and its franchise, as a distribution utility, to provide electricity to its consumers in the least cost manner,” the ERC said in its Sept. 29 decision.

SMC, through its energy arm SMC Global Power Holdings Corp., and Meralco  earlier filed a petition for a temporary rate increase.

SMC claimed its coal power plant in Sual, Pangasinan and the natural gas-fired power plant in Ilijan, Batangas had incurred losses of P15 billion due to the soaring prices of coal and natural gas as well as restrictions in their supply. It said a temporary rate increase was needed to enable these plants to continue supplying power to Meralco.

“After due deliberation and thorough evaluation of all arguments submitted and all information gathered by the Commission pursuant to its regulatory powers, the Commission DENIES Applicants’ Joint Motion for Price Adjustment,” the ERC order read.

The Commission explained that while it is “not blind to the woes and difficulties faced by consumers and businesses,” it still needs to decide on the basis of what is laid down on the PSA, which Meralco and SPCC “entered into on their own free will, without pressure from anyone.”

According to ERC, the PSA provides no room for price adjustment and only a guaranteed supply of energy to Meralco consumers at a fixed price.

“The decision to deny the price adjustment is consistent with principles and mandate of the Commission in the EPIRA to guard against market abuse and to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability,” said ERC.

The ERC then reminded the applicants of the joint motion “to observe not only their reciprocal obligations, but more importantly, the obligation to supply electricity consumers in the least cost manner.”

“Commission finds it appropriate to remind Applicants to faithfully adhere to the terms and conditions of, as well as the obligations under, the PSA. Bearing in mind the ongoing pandemic, the global oil crisis, and other current events affecting its consumers, the termination of the contract will directly or indirectly violate the policies laid down in Sections 2 (b), (c), and (f) of the EPIRA,” said ERC.

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