SMC: CA granted San Miguel power units’ rate hike petitions

The Court of Appeals (CA) has overturned the Energy Regulatory Commission’s (ERC) decision rejecting the power rate hike petitions of San Miguel Corp.’s (SMC) power units.

In a disclosure to the Philippine Stock Exchange on Wednesday, SMC said it received the CA 13th Division’s decision, dated June 27, 2023, granting the consolidated petitions of its power units San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC).

In its order, the CA annulled and set aside the ERC’s orders dated September 29, 2022 for “grave abuse of discretion amounting to lack or excess jurisdiction.”

In September last year, the ERC denied the joint motions of Manila Electric Company (Meralco), SMEC, and SPPC as the parties can find cheaper sources despite the increase in the operating cost of power plants. 

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

The ERC said Meralco’s power supply agreements (PSAs) with SMEC and SPPC are fixed-price by nature and the grounds for increase cited were not among the exceptions that would allow for price adjustment.

The decision prompted the parties to file a petition before the CA, urging the appellate court grant the rate hike “without prejudice to any further requests for price adjustments for June 2022 onwards.”

In annulling and setting aside the ERC’s orders, the CA also granted the joint motions for price adjustment of SPPC (from June 2022 to January 25, 2023) and SMEC (from June 2022 to date).

Sought for comment, ERC chairperson Monalisa Dimalanta said the regulator has “not received a copy yet.”

“[We] will wait for OSG (Office of the Solicitor General) advice on next steps,” Dimalanta said.

The ERC chair, however, said that most probably the regulatory body will file a motion for reconsideration.

Meanwhile, Meralco Regulatory Management head Atty. Jose Ronald Valles said the company has received the CA decision.

“We note that the Court of Appeals has upheld the position taken by SPPC/SMEC and Meralco during the hearing at the ERC that the grant of the fuel price adjustment is the least cost option for our customers  rather than buying replacement power from WESM or other suppliers,” Valles said.

“However, there are some matters in the Decision that we feel need to be clarified. We are consulting with our lawyers on the legal remedies available to us including an appeal to the Supreme Court,” the Meralco  official said.

The CA has, likewise, made permanent the writ of preliminary injunction issued in favor of SPPC.

In January, the CA granted SPPC’s application for a writ of preliminary injunction as the temporary restraining order issued by the court last November 2022 was only good for 60 days.

To recall, in November 2022, the CA temporarily suspended the PSA between SPPC and Meralco, triggered by the company’s plea after the ERC rejected the parties’ petition to hike generation charge. 

Valles, in his statement, said Meralco shall start negotiating for emergency power supply agreement to replace any capacity it might lose should San Miguel terminate its PSA with the power distributor as a result of the CA decision.

“Rest assured that our priority is to always ensure that we have sufficient supply at the least cost for our 7.7 million customers,” the Meralco official said.

In a separate statement, advocacy group Power for People Coalition convenor Gerry Arances said the CA, which is “supposed to uphold the interests of justice and the people,” “failed to do both in its decision granting SMC's petition in its case against the ERC.”

“The court effectively releases SMC from any consequences of breaking a contract simply because it is not earning enough from a commitment it has made voluntarily,” Arances said.

“We hope that the court will reevaluate, and we will file a motion for reconsideration to give the justices another chance to live up to their name,” he added. —NB, GMA Integrated News