Pro-SMC TRO ‘anti-consumer’
ERC chairperson and CEO Monalisa Dimalanta expressed apprehension over the decision, which she said will have ‘an instantaneous effect.’
Millions of Filipino households will feel the impact of an impending power rate hike following the Court of Appeal’s issuance of a Temporary Restraining Order against the Energy Regulatory Commission’s denial of the San Miguel Corp. energy arm’s petition.
The TRO favors SMC in its aim to suspend the Power Supply Agreement of SMC Global Power with Manila Electric Co.
Power for People Coalition, an oppositor of the SMC petition, said the TRO was illogical and anti-consumer.
Consumer groups said SMC must be very desperate for it to stop at nothing to get out of its contract with Meralco.
“We hope that given their efforts to escape their obligations, SMC will be banned from participating in future PSAs. We also hope that despite this setback, any further development on this case will be positive for consumers,” P4P Convenor Gerry Arances said.
The ERC in October denied the petition of SMC to adjust power rates in its 2019 PSA as a result of the drying up of Malampaya and the high prices of gas in the world market, saying that the conditions cited by SMC do not constitute a change in circumstance, which was required by the terms of the PSA for any price adjustment.
The decision of the appellate court suspends the implementation of the power supply agreement between SMC and Meralco.
“The TRO is absurd and rash. It suspended the PSA between SMC and Meralco, which governs how SMC can supply Meralco with electricity and how much SMC can charge. Now that it is gone, how should Meralco act to procure electricity?” Arances said.
“How much can they charge consumers? How should Meralco react given that the PSA suspension is temporary? This is a desperate move from SMC, and with the CA’s approval, consumers are left to foot the bill for SMC’s business decisions to use volatile coal and gas in its power contracts,” Arances added.
Instantaneous effect
ERC chairperson and CEO Monalisa Dimalanta expressed apprehension over the decision, which she said will have “an instantaneous effect.”
“(It) will consequently expose approximately 7.5 million registered Meralco consumers in the National Capital Region and other areas in Regions III and IV to higher electricity prices without preparation usually observed in case of PSA termination,” Dimalanta said.
“The fixed price PSA of Meralco with South Premier Power Corp. covers 670 megawatts of supply. This, along with the other fixed price PSAs, have been shielding Meralco consumers for the past several months from the volatility of prices from WESM and automatic fuel pass-through PSAs,” she added.
Dimalanta reiterated the immediate suspension of the PSAs will “bring us precisely to the situation which we at the ERC have sought to avoid with our ruling that required the proper observance of the terms of the PSA, including the contractually-agreed process of termination.”
60-days TRO in effect
Citing the TRO copy dated 23 November, the ERC said that the appellate court granted the suspension that will be effective for 60 days from the service of the respondents and noted that decisions were based solely on the statements of the SMC power unit.
In the petition for certiorari filed by SPPC which operates the Ilijan natural gas plant, the company claimed that the ERC “acted with grave abuse of discretion in denying its rate increase petition when it interpreted the rights of SPPC under the PSA.”
The petition ended with a prayer that the Court of Appeals granted the rate petition “without prejudice to any further requests for price adjustments for June 2022 onwards.”
Nonetheless, Dimalanta said the Commission is “confident that the Fourteenth Division of the CA, consistent with existing jurisprudence, will accord great respect, if not finality, to the regulator’s factual findings because of its special expertise over the energy sector.”
The Daily Tribune reached out to SMC and the Palace for comment but both have not replied as of press time. Meralco, for its part, said it will consult with its legal counsel to determine the next steps.
“We already received the official copy of the TRO on the PSA between Meralco and SPPC. We are reviewing the Resolution in consultation with our counsel to determine the next steps,” Meralco said in a statement.
“We have also written the DOE to follow up on our previous letter requesting for CSP exemption of certain emergency PSAs that are ready to be implemented to shield our customers against volatile and potentially higher WESM prices,” it added.
To recall, the ERC denied the petition since the regulatory body ruled that the agreed price in the PSA is fixed in nature, and the grounds for the increase cited by SPPC and Meralco were not among the exceptions that would allow for price adjustment.
The fixed price nature of these 10-year PSAs, according to her, is precisely intended to act as a natural barrier protecting Meralco consumers from external threats, such as market volatilities.
PSA must continue
Luke Espiritu, labor lawyer and President of the Bukluran ng Manggagawang Pilipino, a member group of P4P, said the action taken by the CA should not have been in the form of a TRO.
“A TRO is supposed to preserve the status quo to protect the requesting party from an irreparable injury that will be inflicted upon it by another party. In this case, there is no such harm
committed by another party upon SMC,” he explained.
“The ERC simply ordered SMC to continue implementing the PSA, thus maintaining the status quo. Going by SMC’s convoluted logic, it is being harmed because of its own action — entering into a PSA in 2019 with Meralco,” he added.
Espiritu said what SMC wanted to happen, “which was granted by the CA, is to undo a thing that SMC brought upon itself.”
“It seeks to escape a contract but this cannot be allowed by the mere expedient of a TRO. At the very least, a hearing is required and unilateral action by the court cannot suffice,” Espiritu added.
P4P called out SMC for backing out of its responsibility to supply power at the cost it pledged to in its power contracts.