power and water

SMC Global Power warns of rising rates, eyes legal remedies vs ERC order

Ralf Rivas
SMC Global Power warns of rising rates, eyes legal remedies vs ERC order

ERC. Energy Regulatory Commission officials hold a press briefing on October 4, 2022.

Ralf Rivas/Rappler

SMC Global Power and Meralco will exhaust all legal remedies after the Energy Regulatory Commission rejected their petition for higher power rates

MANILA, Philippines – SMC Global Power on Wednesday, October 5, said it is exploring “legal remedies” to stay afloat after the Energy Regulatory Commission (ERC) rejected its joint petition with the Manila Electric Company (Meralco) for a temporary rate hike.

SMC Global Power, an affiliate of Ramon Ang’s conglomerate San Miguel Corporation, said the ERC’s order would hurt consumers.

“[D]enying the petition will not only cripple us, but more importantly, burden consumers who will have to face higher electricity bills,” SMC Global Power said.

SMC Global Power’s affiliates and Meralco wanted a P0.30 per kilowatt-hour (kWh) rate hike for six months, as global coal prices and thinning of the Malampaya gas reserves have pushed up electricity costs.

But in a briefing on Tuesday, October 4, ERC Chairperson Monalisa Dimalanta said the commission’s computations differ from what the companies told the public.

Based on the ERC’s estimates, the companies want as much as P1.50 per kWh passed on to consumers for six months, and as much as P3 per kWh if spread out over three months.

The ERC’s 40-page decision emphasized that the 10-year power supply agreement (PSA) is fixed price in nature to protect consumers from market volatilities. 

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Moreover, the ERC said SMC Global Power and Meralco’s arguments do not show a “change in circumstances” as defined in the PSA.

Dimalanta said there are other remedies in the PSA that can ensure lower power rates.

Despite the rejection, SMC Global Power promised uninterrupted power supply.

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

Meralco also seeking remedies

As for Meralco, it said it would comply with the ERC order.

“We have read the decision denying the claim for price adjustment of SMC. For Meralco, we shall comply with the decision and we shall exert all available remedies to prevent termination of the PSAs,” Meralco head of regulatory management Jose Ronald Valles said.

Meralco noted that should SMC Global Power’s affiliates – South Premiere Power Corporation and San Miguel Electric Corporation – fail to deliver power for “whatever reason,” it would be “constrained” to source up to 1,000 megawatts from the Wholesale Electricity Spot Market.

“We already sought offers and entered into emergency power supply agreements (EPSAs) with other generation companies to ensure continuity of stable, reliable, and adequate supply to Meralco customers,” Valles said.

Meralco is hoping for swift action from the Department of Energy to exempt the EPSAs from undergoing a competitive selection process. – Rappler.com

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.