Cheating not allowed

Consumers consider the SMC move as cheating after it bid low and now wanted its contract terms amended when it is not able to fulfill them.

By TEB

September 3, 2022

With the economic recovery underway, electricity use determines which businesses can be sustained and those that fall by the wayside.

Filipino businesses at this time are making difficult decisions to ensure survival and later profitability.

Not for conglomerate San Miguel Corporation, which is now employing its corporate might to arm-twist the Energy Regulatory Board to give in to the demand for a power rate increase, citing a huge P15 billion in losses.

The rocketing cost of fuel, coupled with shortfalls in the supply from the fast-depleting Malampaya natural gas field, resulted to the rising expenses of its unit SMC Global Power Holdings Corp.

Think-tank Center for Energy, Ecology, and Development indicated that based on SMC’s price adjustment petitions for its Sual coal and Ilijan natural gas plants, consumers will be shelling out P33.76 to as much as P168.80 per month on their electric bills based on their power consumption.

For an average consumption of 200 kilowatt-hour, an additional P67.52 will be tagged to electricity bills, or P48, to pay for San Miguel Energy Corporation coal charges, and P19.52 in South Premiere Power Corporation gas charges.

There should be no problem with filing a rate adjustment with the ERC, but the SMC plea came about because of circumstances that should have been covered in the Power Supply Agreement that SMC won from distributor Manila Electric Co.

SMC clinched the PSA by submitting a low bid, which makes it unfair for it to later on approach the ERC to have the terms of the PSA revised.

The contract is what it is, and SMC should absorb the losses, which it should credit to bad business.

SMC is now claiming that an escalation clause is provided in the PSA, which is ridiculous since it defeats the rationale of bidding, which is to get the best offer available.

Consumer group Power for People Coalition said ERC should dismiss the SMC Global Power rate hike pleas.

Consumer groups are worried that if the ERC gives in, it would send other independent power producers trooping to its door, seeking the same contract revisions that would throw everything in disarray in ensuring the competitive selection process that has been enshrined in obtaining the least cost of electricity for consumers.

“There is no reason to grant the request of SMC for higher power rates from its Ilijan and Sual plants. From the words of Mr. Ramon Ang himself, they chose the fuel and the rate at which they bid with. They should bear the consequences of their choices,” P4P Convenor Gerry Arances said.

Consumer groups alarmed by the SMC petitions said in the recent ERC public hearing that electricity users should not be made to pay more by power companies with poor foresight on gas price and supply projections.

Arances said that instead of giving in to the SMC blackmail of stopping fuel supply to Meralco, the regulator should study possible penalties on the corporate behemoth to compel its compliance with the provisions of its PSA.

Consumers consider the SMC move as cheating after it bid low and now wanted its contract terms amended when it is not able to fulfill them.


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