SMC appeals ERC denial of rate hike plea | Inquirer Business

SMC appeals ERC denial of rate hike plea

/ 02:26 AM November 25, 2022

Listed conglomerate San Miguel Corp. (SMC) has appealed the Energy Regulatory Commission’s (ERC) rejection of the power rate hike sought earlier by its power subsidiaries and power distributor Manila Electric Co. (Meralco).

ERC Chair Monalisa Dimalanta said their office had received a copy of the petition filed by SMC before the Court of Appeals (CA) last Monday to overturn the ERC order.


“They filed a petition for certiorari, which means they are appealing to the CA. They said the ERC does not have jurisdiction over the case,” Dimalanta told reporters.

“They are asking CA to issue a TRO (temporary restraining order) so the order will not be implemented and they are asking the CA to reverse our decision,” she added.


According to Dimalanta, the ERC will defer to the appellate court on their next move, but it already referred the issue to the Office of the Solicitor General.

The ERC earlier rejected the joint petition of Meralco and SMC-owned South Premiere Power Corp. (SPPC) and San Miguel Energy Corp. (SMEC) for a rate increase, claiming there was a “change in circumstance” after the PSAs were signed in 2019, owing to skyrocketing coal and fuel prices aggravated by Russia’s invasion of Ukraine. Because of the surge in the cost of imported coal, for example, it became more expensive to operate the plant, but it was unable to pass on the added cost to consumers because the ERC rejected its proposed rate hike.

The ERC, in its Sept. 29 order, said there was no basis to grant the proposed rate hike as their supply deals have “the nature of a financial contract with a fixed price” and SPPC and SMEC as suppliers assumed all risks relative to market conditions and economic realities.

The ERC said it had to decide based on the provisions of the supply deals entered into by Meralco with SPPC and SMEC “on their own free will, without pressure or intervention from anyone.”

Further, the ERC said Meralco had yet to exhaust the available remedies to fulfill its obligation to supply electricity to consumers at the least possible cost.

From 2021, SMC said its power entities had so far incurred P15 billion in losses for operating its coal-fired power plant in Sual, Pangasinan, and its natural gas-fired power plant in Ilijan, Batangas.

SMC formally issued a “notice of termination” in August covering two supply agreements that would be effective Oct. 4 if no relief would be given or the ERC won’t act favorably on their proposal.

But Dimalanta said Meralco had not yet advised them on whether the firm already ended the supply agreements.

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TAGS: ERC, rate hike, San Miguel Corp. (SMC)
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