ERC denies power rate hike petitions of Meralco, San Miguel

The Energy Regulatory Commission (ERC) has rejected the power rate hike petitions filed by the Manila Electric Company (Meralco) and the San Miguel Group.

The ERC said it denied the joint motions of Meralco and South Premiere Power Corp. (SPPC), and San Miguel Energy Corp. (SMEC) on September 29, 2022, with three votes.

The parties argued that the global increases in fuel and coal prices have driven SPPC and SMEC to incur losses in operating their power stations, which would justify the proposed rate hikes.

Meralco and San Miguel earlier cited the higher prices of coal and natural gas materials used to produce electricity in petitions.

According to the ERC, public service agreements (PSAs) indicate that SPPC and SMEC can supply Meralco from sources other than the Ilijan Natural Gas Plant and the Sual Coal Plant.

“While it may be true that the costs of operating the power plants have increased, SPPC and SMEC can supply Meralco’s demand from other, possibly cheaper sources,” the ERC said.

“More importantly, the fixed price nature of these 10-year PSAs is precisely intended to act as a natural barrier protecting Meralco consumers from external threats, such as market volatilities,” it added.

The ERC also noted that the grounds of the parties in the petitions do not qualify as “Change in Circumstances” as defined in the PSAs which can lead to price reopening.

Under the agreements, a “Change in Circumstances” is determined upon an enactment or enforcement of a law which may cause serious damage and adverse effects on the financial condition of the parties.

The agency also said there are “available remedies” for Meralco under the PSAs in line with its duty to ensure supply of electricity in the least cost to the public.

“As we protect consumer interests, our rulings cannot be oppressive to business,” ERC chairperson Monalisa Dimalanta said in the statement.

“We tried, as we ruled on these Joint Motions, to decide on the basis of the clear terms of the PSAs that the parties signed up for, and on the basis of law,” she added.

Meanwhile, the Department of Energy (DOE) said it respects the independence of the ERC under the Electric Power Industry Reform Act (EPIRA).

“The Department is highly confident that as responsible corporate citizens and business entities imbued with public interest, San Miguel Power and Meralco will be guided accordingly by the ERC Order and insure uninterrupted power supply to our people and the country, notwithstanding the denial of their joint petition,” it said.

GMA News Online has reached out to Meralco and the San Miguel Corp. for comment on the matter, but no response has been received as of posting.—AOL, GMA News