SMC power unit won’t withhold supply to Meralco despite junking of rate hike petition

San Miguel Corp.’s (SMC) power unit, SMC Global Power Holdings Corp. (SMCGP), on Wednesday said it would not disrupt its supply of electricity to Manila Electric Co. (Meralco), despite the rejection of their joint petition to hike power rates.

On Tuesday, the Energy Regulatory Commission (ERC) announced it denied the joint motions of Meralco and SMC Group’s South Premiere Power Corp. (SPPC), and San Miguel Energy Corp. (SMEC) on September 29. 

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

The ERC, however, said that SPPC and SMEC can supply Meralco’s demand from other sources which are “possibly cheaper sources.”

With this, SMCGP, the holding firm of San Miguel’s interests in the power sector, said that “in the meantime, we will do everything we can to make sure Meralco's energy supply is not disrupted.”

“Despite the present challenges, we will never withhold our available power capacity to the detriment of the country and the consumers,” SMCGP said.

The company said it would continue to explore other legal remedies “to allow us to sustainably provide for the increasing power needs of our country while meeting our obligations to our various stakeholders.”

Nonetheless, SMCGP described the denied power rate hike motion as a “temporary relief” that “would have enabled us to preserve a few of the last remaining fixed-rate PSAs (power supply agreements) of Meralco that are responsible for keeping power rates in Metro Manila low compared to other parts of the country, amid surging global fuel prices.”

If the petition had been granted, Meralco customers' electricity rates would have gone up by P0.30 per kilowatt-hour for a six-month period.

“Based on Meralco’s own computation, which was validated by ERC’s Regulatory Operations Office, the interest of the consumers would have been best served with the approval of the petition. The ERC-ROS itself confirmed that the commission does not have any other data or information that could contradict or disprove the computations and simulations submitted by Meralco,” SMCGP said.
 
“We believe these numbers speak for themselves. The ERC, armed with such data, knows too well that denying the petition will not only cripple us but more importantly, burden consumers who will have to face higher electricity bills,” it added.
 
Moving forward, SMCGP said it remains focused on maximizing its existing power assets to help sustain our economy's recovery, while investing in technologies that will facilitate our transition to cleaner energy. 

Meralco regulatory management head Atty. Jose Ronald Valles said that the power distributor would comply with the ERC decision and exert all available remedies to prevent termination of the PSAs with SPPC and SMEC. 

“However, in the event that SPPC and SMEC [are] unable to actually deliver power to Meralco for whatever reason, we are constrained to source up to 1,000 MW (megawatts) from WESM without prejudice to the resolution of whatever legal remedies Meralco may pursue against SPPC/SMEC under the PSA,” Valles said.

He added that Meralco also sought offers and entered into emergency power supply agreements (EPSAs) with other generation companies to ensure continuity of a stable, reliable, and adequate supply to Meralco customers.

In particular, generation firms offered to provide a combined capacity of 1,070 MW to Meralco.

Meralco received offers from SEM-Calaca Power Corp. (200 MW), GNPower Dinginin Ltd. Co. (300 MW), Masinloc Power Partners Co. Ltd. (250 MW), SMC Consolidated Power Corp. (200 MW) and SPPC (120 MW).

SEM-Calaca is under the Semirara Mining and Power Corp., which is led by Consunj; GNPD is owned by AboitizPower Corp.; and MPPCL, SCPC, and SPPC are under the San Miguel Group.

“We are hoping for the swift action of the DOE (Department of Energy) in exempting the EPSAs from undergoing CSP (competitive selection process). Without these EPSAs, our customers may become exposed to volatile prices,” Valles said. — VBL, GMA News