Consumer groups wanted the Energy Regulatory Commission to compel San Miguel Corp. to show proof of its claim of P15 billion losses in its petition to amend the fixed rates in its power supply agreement with distributor Manila Electric Co.
Its energy unit, San Miguel Global Power, has invoked the "change-in-circumstance" provision in the PSA to seek a temporary adjustment in the charges of its Sual coal plant and the Ilijan natural gas plant.
SMC Global Power blamed higher coal prices and supply restrictions from the Malampaya field for losses that had accumulated. It had threatened to cut off electricity supply totaling 1 gigawatt by 3 October if it fails to obtain a revision of terms in its PSA.
Oppositors to the PSA amendment said that SMC Global Power should first show proof that it is indeed losing before ERC acts on the notification to end the deal with Meralco.
Power for People Coalition provided Daily Tribune with data showing that other energy producers with a similar PSA to Meralco have not complained of having accumulated losses.
Once SMC Global Power unilaterally rescinds its PSA, consumer groups wanted the ERC to cite the company for being unreliable which would be the basis for Meralco to blacklist the company from joining PSA auctions under the competitive selection process.
Data showed that out of the six PSAs with a straight energy price scheme that included the two SMC Global Power deals, only the SMC unit claimed incurring losses.
Pricing scheme acts as a cover
The six PSAs with straight energy pricing and a total contracted capacity of 1,700 megawatts.
Approximately 210 megawatts out of the 1,700 MW were purchased from solar and geothermal power plants.
The charts showed Meralco's power rates have not increased as drastically as those in other provinces because of the straight energy pricing PSAs.
"Consumers have been protected from increasing fossil fuel prices, leaving generation companies to shoulder these risks," according to P4P.
AC Energy, a unit of Ayala Corp., has two PSAs with straight energy pricing comprising a coal and a combined coal and two solar farms, while First Gen Hydro Power of the Lopez Group also has a PSA using the same straight energy pricing for its two geothermal power plants.
"Both AC Energy and First Gen have neither claimed nor tried to recover its losses," according to P4P convenor Gerry Arances.
P4P termed the conflicting financial situation of the SMC unit with the other PSA contractors as a "curious case."
Data culled by P4P showed even as SMC Global Power claims to have lost P15 billion from 2021 to date due to the operations of its SMEC coal and SPPC gas plants, it has reported a total net income of P17.9 billion from 2021 to the first quarter of 2022.
Its parent, SMC reported a total net income of P80.7 billion from 2021 to the first half of 2022.
P4P added the straight pricing scheme that SMC Global Power wanted to free itself from had tempered the increases in power rates despite the volatilities as a result of the pandemic and the Eastern European conflict.
Data showed nearly a third of Meralco's contracted and pending capacity as of 2022 is under straight pricing.
Under the alternative two-part tariff scheme, consumers pay for higher fixed capital costs in cases of lower utilization factor, and higher variable costs in cases of spikes in fuels and exchange rates.
Meanwhile, generation companies which insisted on operating fossil fuel power plants continue to rake in profits.
