SMC wins legal tussle vs ERC on power deal

By: Lisbet K. Esmael @lisbetesmael - 2 weeks ago

PHOTO: San Miguel Corp website

Updated on September 4, 2024 at 11:41 a.m.

The energy arm of tycoon Ramon Ang gained victory after the Supreme Court rejected “with finality” the energy regulator’s plea against the termination of the supply contract between San Miguel Corp. and Manila Electric Co. (Meralco).

SMC bared this development in a disclosure to the local bourse Tuesday, a day after its legal team received the favorable decision from the First Division of the Supreme Court (SC).

To recall, the Energy Regulatory Commission (ERC) sought the SC’s intervention in 2023 after the Court of Appeals ruled in favor of South Premier Power Corp. (SPPC) and San Miguel Energy Corp., which is now named Sual Power Inc., and power distributor Meralco.

READ: Regulator OKs Meralco supply deal with San Miguel unit

SPPC and Sual Power are both under San Miguel Global Power Holdings Corp.

The higher court said in its decision that there was “no substantial argument to warrant a modification of this Court’s resolution … ”

The SC likewise junked ERC’s wish to impose a temporary retaining order due to “lack of merit.”

SMC’s power subsidiaries had a supply agreement with Pangilinan-led Meralco, but the former wished to have the deal ended after the ERC rejected their rate hike petition despite the spike in fuel costs. This caused billions in losses for SMC.

SPPC operates the gas-fired power plant in Ilijan, Batangas while Sual Power is the administrator of the coal-fired power plant in Sual, Pangasinan. These companies earlier told the ERC that their losses already ballooned to P15 billion, and petitioned to recover about P5 billion.

In a message to reporters, ERC chair and chief executive officer Monalisa Dimalanta said they were already talking with the Office of the Solicitor General about any legal remedies the agency can tap into following this development.

It was not clear, however, what would happen to SMC’s monetary claims, especially if consumers had to pay for them.

As of this writing, SMC has yet to reply to a request for a comment.

Dimalanta, meanwhile, said the ERC would study possible implications of the legal decision.

Sought for comments, Terry Ridon, convener of Infrawatch PH, told Inquirer that the SC’s move should “close this tumultuous chapter between the ERC and major players in the power sector.”

“Power sector stakeholders should keep their eyes on the ball, which includes raising capacities amid surging demand while ensuring the least cost to consumers,” Ridon added. INQ