Rollback, not increase

Consumers have been paying excess charges for so long and deserve a reimbursement rather than the ‘temporary’ price increases that SMC had sought with the ERC.

September 18, 2022

Instead of increases in the contracted price in its power supply agreements due to “change in circumstances,” San Miguel Corp. may have to reimburse consumers as a result of a 2019 Supreme Court ruling.

In the review of PSAs amid the claim of the corporate empire’s energy arm SMC Global Power of massive losses, the consumer alliance Power for People found 120 existing contracts that did not comply with the High Court ruling that essentially required the competitive selection process on all deals.

At least 33 of the biggest of the 120 deficient PSAs are owned by SMC.

Several PSAs are now under scrutiny for violating the SC decision in the Alyansa para sa Bagong Pilipinas Inc. vs Energy Regulatory Commission case.

The tribunal cited these PSAs did not follow procedures under the CSP requirements.

The relevant portion of the High Court’s ruling stated “all Power Supply Agreement applications submitted by Distribution Utilities to the Energy Regulatory Commission on or after 30 June 2015 shall comply with the Competitive Selection Process” in accordance with Department of Energy Circular DC 2018-02-0003 (2018 DoE Circular) and its Annex A.

Moreover, the SC required that electricity rates be adjusted once the proper process is observed.

“Upon compliance with the Competitive Selection Process, the power purchase cost resulting from such compliance shall retroact to the date of effectivity of the complying Power Supply Agreement, but in no case earlier than 30 June 2015, for purposes of passing on the power purchase cost to consumers,” the SC ruled.

In a recent meeting with ERC officials, P4P identified among the invalid PSAs that remain active the one between Zamboanga City Electric Cooperative and San Miguel Consolidated Power Corp., which contributes to 62.7 percent of Zamboanga City’s power.

In that particular deal, SMC Global Power charged P10.57/kilowatt-hour in August, which is way above the average billing in Manila.

Most of the PSAs that the SC ruling cited were found to be uncompetitive and expensive.

Distribution utilities are still purchasing electricity from generation companies under at least 28 PSAs that were ordered to comply with the CSP requirement under the SC decision, which according to consumer groups has greatly contributed to the astronomical prices of electricity outside Metro Manila.

What the SC ruling boils down to is that the consumers have been paying excess charges for so long and deserve a reimbursement rather than the “temporary” price increases that SMC had sought with the ERC.


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