Consumer groups have banded against San Miguel Corp. as its threat of a 4 October unilateral termination of its power supply agreements closes in, which is expected to result in a spike in electricity rates.

The Asian conglomerate's energy arm SMC Global Power has threatened to end its supply deals for its Ilijan natural gas plant and the Sual coal plant that together supplies 1 gigawatt to the national grid if the Energy Regulatory Commission does not grant a P4.80 per kilowatt increase in the contracted rates.

Oppositors filed a manifestation on Friday seeking ERC to junk the SMC petition.

The opponents of the SMC action lambasted the main claim of San Miguel that there is a "change in circumstances" for which they should be allowed to pass on costs to consumers.

"There is no other company using straight price contracts which are claiming that. AC Energy of the Ayala Group is not seeking to change its PSAs. Is San Miguel really losing money? We haven't seen any financial statements to that effect. If they are, why is AC Energy not complaining? Is it because AC Energy made provisions for changes in fossil fuel prices which everyone knows happen all the time and San Miguel didn't? In that case, then San Miguel deserves to lose money for making a mistake. They should pay, not consumers," consumer activist Luke Espiritu said.

Organizations led by Power for People Coalition members Center for Energy, Ecology and Development, Philippine Movement for Climate Justice, and Sanlakas, filed a manifestation and comment before ERC to block the rate increase bid which would allow the latter to break its contract and pass on higher gas prices to consumers.

Sual owner San Miguel Energy Corp. and South Premiere Power Corp., operator of the Ilijan natural gas plant, were granted PSAs with Meralco using the "straight price" system, where the two suppliers gave a fixed price for their electricity.

Trojan horse for unlimited profits

The company is now seeking to evade its commitment and pass on losses in the gas market to consumers, with San Miguel claiming over P15 billion in losses.

"The issue is, does straight pricing work? We say yes. The lowest generation rates from February to July 2022 came from PSAs with straight energy prices and renewable energy sources. Meralco itself said in its Sustainability Report for 2019 that the straight energy price is better and pro-consumer, even issuing a press release proudly reporting lower rates in February 2020 because of the pricing scheme," P4P Convenor Gerry Arances said.