Consumers deserve fair shake

SMC Global Power said its power plants had incurred losses of P15 billion from 2021 up to present due to ‘skyrocketing global coal prices and unilateral natural gas supply restrictions from Malampaya.

By TEB

August 14, 2022

Independent calculations showed that consumers will have to suffer from P33.76 to as much as P168.80 per month increase in electricity bills if the Energy Regulatory Commission (ERC) gives in to the P5.2 billion relief petition of San Miguel Corporation’s (SMC) independent power producers (IPPs).

An average household that consumes 200 kilowatt hours (kwh) will have to shoulder P67.52 more on their bill, or broken down into P48 from San Miguel Energy Corporation’s (SMEC) petition to recover coal costs and P19.52 as a result of South Premiere Power Corp.’s (SPPC) relief from higher gas charges.

SMEC runs the 600-megawatt (MW) Sual coal plant, while SPPC operates the 1,200 MW Ilijan natural gas plant.

SMC Global Power Holdings Corp. (SMC Global Power), which is the energy unit where SMEC and SPPC fall under, said in its petition with ERC that the cost recoveries were necessary for its IPPs to continue supplying power to customers.

“San Miguel Global Power raked in P17.9 billion net income from last year up to the first quarter of 2022, and now it expects ordinary consumers with a pitiful minimum wage of P570 per day in the face of inflation to just take this lying down. It’s as if San Miguel is passing the hat around and expects electric consumers to pitch in for them,” consumer group Power for People Coalition (P4P) convenor Gerry Arances lamented.

The group indicated that if ERC decides in favor of granting SMC’s petition, the agency will be considered giving “more weight to the woes of a billion pesos-earning company than the welfare of a simple Filipino.”

“To borrow the words of United Nations Secretary-General Antonio Guterres, that is grotesque greed,” Arances added.

SMC Global Power said its power plants had incurred losses of P15 billion from 2021 up to present due to “skyrocketing global coal prices and unilateral natural gas supply restrictions from Malampaya.”

Now, the SMC unit is seeking a “temporary and equitable relief” for the losses through a rate increase in its power supply agreements (PSA) over the next six months.

“SMC knew prices of imported coal and gas are subject to supply disruptions and fluctuations on the world market, and Malampaya would dry up soon. Still, they pursued their projects, knowing they can always hold the consumer hostage to pay for their mistakes. The government should not allow it to continue with this business model,” Arances said.

The group said that, in effect, SMC is passing on the cost of its mistakes in business decisions to consumers through the petitioned adjustments and rate increases.

When SMC participated in the bid for the supply of electricity to Meralco through the power supply agreements, it gave as reason for the low pricing offered by the Sual and Ilijan power plants as part of its effort to “benefit consumers.”

Now SMC is relying on the government, specifically the ERC, to adjust rates and cover its losses after sealing the PSAs through public bidding subject to the competitive selection process rules.

The consumer group said if SMC can’t sell electricity at its bid price, then another bidding should be held instead of it running to the ERC and, in effect, force consumers to foot the bill.

Electricity users should be spared from the consequences of wrong business decisions, the cost of which is regularly passed on in the monthly bills.


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