The Court of Appeals has granted the temporary restraining order (TRO) sought by conglomerate San Miguel Corp. (SMC) which, in effect, will temporarily halt the implementation of its power supply deal with Manila Electric Co. (Meralco).
This move could in turn lead to a spike in the monthly power bills of Meralco customers, a concern raised by the Energy Regulatory Commission. In a statement on Friday, the ERC said the 14th Division of the CA issued a TRO in favor of South Premiere Power Corp.
The ERC cited a portion of the CA ruling dated Nov. 23: “… in view of the circumstances and the interest of the general public, this court grants the TRO and hereby suspends the implementation of the PSA (power supply agreement).”
“The TRO shall be effective for a period of 60 days from service on respondents,” it added.
Higher prices
The TRO request stemmed from the ERC’s rejection of the joint SMC-Meralco petition for a rate increase to offset soaring coal and fuel prices as a result of Russia’s invasion of Ukraine.
In a disclosure on Friday, SMC said the 17th Division of the CA is yet to decide on the petition for certiorari separately filed by San Miguel Energy Corp. (SMEC).
ERC Chair Monalisa Dimalanta expressed “grave concern on the instantaneous effect” of the temporary suspension of supply deals among the concerned parties.
In a statement, Dimalanta said this would expose about 7.5 million Meralco customers in Metro Manila and adjacent areas to higher electricity prices as the fixed rates in the current PSAs would no longer be enforced.
Dimalanta stressed that the fixed price PSAs “have been shielding Meralco consumers for the past several months from the volatility of prices from WESM (Wholesale Electricity Spot Market) and automatic fuel pass-through PSAs.”
Next steps
“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,” she added.
Nonetheless, the ERC expressed confidence that the CA “will accord great respect, if not finality, to the regulator’s factual findings because of its special expertise over the energy sector.”
For its part, Meralco said it would consult its counsel to explore the next steps in light of the CA decision and will follow up with the Department of Energy (DOE) on its prior request to immediately secure additional power supply without going through a competitive selection process (CSP).
“We have also written the DOE to follow up on our previous letter requesting for CSP exemption of certain emergency PSAs that are ready to be implemented to shield our customers against volatile and potentially higher WESM prices,” said Jose Ronald Valles, first vice president and head of Regulatory Management of Meralco.
Consumer group Power for People Coalition (P4P), meanwhile, lambasted the CA for what it described as an “illogical and anticonsumer” resolution on the issue.
“The TRO is absurd and rash. It suspended the PSA between SMC and Meralco, which governs how SMC can supply Meralco with electricity and how much SMC can charge,” Gerry Arances, P4P convener, said in a statement.