SMC to stop supplying power to Meralco under Ilijan contract

Conglomerate San Miguel Corp. (SMC) is walking away from its Ilijan power supply deal with Manila Electric Co.  (Meralco).

SMC Global Power Holdings Corp. (SMCGP), the power unit of SMC, said it had notified Meralco that it would stop supplying power under their 670-MW Ilijan power supply agreement (PSA) effective Dec. 7.

The announcement comes after the Energy Regulatory Commission (ERC) rejected the joint petition of SMC and Meralco for relief in the form of a temporary increase in power rates.

“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,” said SMC president Ramon Ang in a statement.

“Unfortunately, despite being shown that granting our petition would have been the cheapest option for consumers, the ERC still denied our petition, 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,” added Ang.

Signed in 2019, the supply deal covers 670 megawatts of electricity coming from the 1,200-MW Ilijan power plant which is operated by SMGCP subsidiary South Premiere Power Corp.