Prospects of brownouts and higher electricity bills that face consumers may become real since San Miguel Corp. energy unit SMC Global Power appears bent on unilaterally ditching a power supply agreement on 4 October.

Meralco will have to secure an emergency power supply agreement, or buy from the power spot market to cover the estimated one gigawatt of electricity, which will be taken off the grid by then.

Both options would mean higher electricity bills, which is a possibility that SMC is exploiting to arm-twist the Energy Regulatory Commission into granting a P4.80 per kilowatt hour increase in its PSA contracted price.

The regulator can, however, match the apparent blackmail by mandating that the pullout of SMC Global Power will have to be penalized, and the amount to be raised from the sanction will be applied to the likely increase in power rates.

Civic groups opposing the SMC Global Power petition said the ERC can't just roll over after the power firm withdraws from the PSAs, since the electricity involved in the deal is such a big chunk of the supply for Luzon "and it will disrupt the whole system."

When a large power plant is taken off the grid, it causes rotating brownouts, so there must be accountability there, according to the consumer group P4P.

Since SMC Global Power's move to unilaterally break its contract with Meralco carries a heavy punitive charge of P255.5 billion, Meralco can apply the amount to cover the increases in power bills due to SMC Global Power's indiscretion.

The power sector watchdogs said the SMC affiliate brought its predicament to itself by bidding very low to corner the two PSAs with Meralco.

The offer should have made allowances for an increase in coal prices and the depletion of the natural gas supply from the Malampaya field since these are anticipated events.

SMC Global Power's petitions cited change in circumstances, which are the coal price fluctuation and the Malampaya supply restriction, as a factor for its petitions for temporary adjustment in the PSA rates of the Ilijan and Sual coal plants.

The PSA, however, specifically stated that changes or variations over time of the costs of operation of the power supplier or Meralco, variations over time of the market prices, or the values of electricity shall not in themselves constitute a change in circumstances.

The ERC should also be prepared for the consequences of giving in to SMC Global Power, since other generation companies are expected to apply for temporary tariff adjustments because they are having the same difficulties as the SMC subsidiary.

ERC should exercise authority in ensuring that the welfare of consumers is protected.