ERC looks to High Court amid suspended power supply deal

THE Energy Regulatory Commission (ERC) is considering its legal options after the appellate court indefinitely suspended a power supply deal that the regulator wanted the contracting parties to honor at their previously agreed price.
“The Office of the Solicitor General (OSG) is still studying all available legal remedies, including possibly going to the Supreme Court (SC), among others. We defer to the advice of OSG on best legal recourse for ERC and the consumers,” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said in a Viber message to BusinessWorld last week.
Ms. Dimalanta said the power supply agreement (PSA) between Manila Electric Co. (Meralco) and South Premiere Power Corp. (SPPC) will remain suspended until the Court of Appeals (CA) issues a final decision on the merits of the case.
The CA ruling is the latest development in the deal that power supplier SPPC and electricity distributor Meralco in May last year jointly asked the ERC to approve at a higher rate.
The petition filed by the contracting parties was supposed to prevent further losses to SPPC to allow it to continue supplying power to Meralco.
SPPC affiliate San Miguel Energy Corp. (SMEC) and Meralco sought a similar rate increase in May last year before the ERC, which the regulator also rejected in September last year. SPPC and SMEC are subsidiaries of SMC Global Power Holdings Corp., the power arm of San Miguel Corp.
The ERC decision prompted SMC Global Power to elevate the cases to the appellate court in November last year.
In a statement last week, Meralco said the CA granted the writ of preliminary injunction sought by SPPC on its PSA with the power distributor.
“With the [writ of preliminary injunction], implementation of the PSA will remain suspended until such time that the Court resolves the petition for certiorari filed by SPPC,” Meralco said.
The power distributor also noted that it would exhaust all measures and work with relevant industry stakeholders to mitigate the impact of the injunction to “ensure the continued delivery of stable and reliable power to its 7.6 million customers.”
Ms. Dimalanta said: “We are seeking guidance of our counsel, OSG, on this latest resolution of the 13th Division of the CA that granted the permanent injunction in favor of SPPC, while the 16th Division earlier denied the injunction plea of SMEC.”
As of last week, she said the regulatory body had not received a copy of the CA order, but she said, “the 13th Division ordered SPPC to post a P100 million bond to cover for any and all damages that may result from the [injunction] should the court later decide against SPPC.”
SPPC’s contract with Meralco was agreed upon in 2019 for a period of 10 years. It covers about 670 megawatts of capacity and is priced at P4.2455 per kilowatt-hour (kWh).
In August last year, SMC Global Power said its units SPPC and SMEC had incurred a combined loss of P15 billion. The rate increase was meant to recover part or P5 billion of the units’ losses.
The company cited a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the contracts with Meralco. However, the ERC denied the petition, saying this had no basis as the PSA is a fixed-rate contract.
After the denial of its petition, SMC Global Power appealed the ERC decision by filing a petition for certiorari with the CA, which issued a temporary restraining order last month suspending the PSA with Meralco.
On Dec. 7, 2022, SMC Global Power’s SPPC stopped supplying power to Meralco, prompting the electric utility to secure an emergency power supply agreement with Aboitiz Power Corp. (AboitizPower) at a rate of P5.96 per kWh from Dec. 15, 2022 until Jan. 25, 2023.
AboitizPower said it will not renew its deal with Meralco, forcing the latter to source more expensive power from the Wholesale Electricity Spot Market.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose