Consumers vs SMC
It is ERC’s mandate to look after the welfare of consumers and shield electricity users from big business abuses.
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Daily TribuneIt is ERC’s mandate to look after the welfare of consumers and shield electricity users from big business abuses.
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The spotlight is now on the Energy Regulatory Commission as consumers await its move regarding the threat of San Miguel Corp.'s energy arm of unilaterally terminating its power supply agreement with the Manila Electric Co.
Consumer groups said they are wary over the possible regulatory capture as they still have a pending plea for SMC Global Power to show proof over its claimed P15 billion losses.
SMC's affiliate is using the financial downturn as an excuse to either revise or rescind the PSA with Meralco.
The PSA provided a fixed amount of electricity that SMC Global Power now complain is untenable because of rising coal prices and supply restrictions from the Malampaya natural gas field.
The consequence of a unilateral SMC Global Power pullout from the PSA is that Meralco will have to fill up more than one gigawatt of electricity through the Wholesale Electricity Spot Market that would jack up the cost of monthly bills.
Discussions in the ongoing ERC public hearing on the various petitions of SMC Global Power revealed the SMC unit will end the PSA on 3 October.
The threat to pull out is meant to intimidate ERC to approve its rate hike petitions.
Based on SMC's price adjustment petitions for its Sual coal and Ilijan natural gas plants, monthly bills will cost P33.76 to as much as P168.80 more per month.
For an average consumption of 200 kilowatt-hour, P67.52 will be added to electricity bills, or P48, to pay for San Miguel Energy Corporation's coal charges, and P19.52 in South Premiere Power Corporation gas charges.
Ending the PSA is also the likely option since the regulator has been warned that giving in to SMC Global Power will open the floodgates for petitions for PSA adjustment from other independent power producers.
Allowing adjustments undermines the sanctity of contracts, the integrity of the bidding process and credibility of SMC's other PSAs.
IPP power suppliers, which are in the same boat as SMC Global Power, said granting additional rates to money-losing contracts will be unprecedented.
When SMC bid low to corner Meralco contracts, the terms and conditions were very clear. They knew the commercial risks that came with the PSAs and their bids were supposed to reflect these risks.
Even the dwindling Malampaya natural gas output is general knowledge, since only new explorations and the rehabilitation of the field can halt its depletion by 2027.
SMC Global Power is after the pass-on provision in the contracts to allow its energy business to contribute more to its huge annual profit, and it will be extracting such gains from consumers who are struggling to recover from the effects of the more than two-year pandemic.
It is ERC's mandate to look after the welfare of consumers and shield electricity users from big business abuses.
