Consumers lock arms vs SMC threat

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.

The rate hike opponents slammed the excuse given by SMC Global Power to escape its commitment to consumers and the government.

Arances added the energy companies are using the petition as a Trojan horse to blast the way open for unlimited profits at the expense of consumers.

"Under straight pricing, consumers pay a fixed price regardless of the cost of fuel. If this petition is granted, then it means energy companies make a profit when fuel prices are low and make a killing when fuel prices are high, because they pass on higher fuel prices to consumers. How is this now different from a pass-on provision? It is as if the government is giving them consumers' money because they always win and consumers always lose," he added.

Batangas barrage

Civic groups stepped up their protest actions in the runup to the SMC threat to deprive Luzon of 1 gigawatt of electricity to twist ERC's arm into granting the petition.

The groups brought their complaints to Batangas where SMC is setting up a liquefied natural gas terminal.

A motorcade was held to assail efforts of SMC to hike power prices and build more liquefied natural gas facilities, which consumers see as the precursor to even higher electric bills.

The protest action was joined by local organizations including Bukluran ng Mangingisda sa Batangas, Youth for Verde Island Passage, Save Sta. Clara Movement, Samahan ng Manininda sa Daungan ng Batangas.

Their clamor was for the use of renewables instead of expensive fuels for electricity.

The use of fossil fuels such as gas and coal is identified even by generation companies as a key source of record high prices of electricity.

"SMC's plan to shift away from coal is a good step but heading to gas is a risky pathway for the Philippines. The ongoing energy crisis shows how vulnerable gas-dependent countries are to energy price volatility," Asia Electricity Analyst Achmed Edianto of energy think-tank Ember, said.

"The Philippines needs to reduce its reliance on depleting gas, as it will likely become an expensive distraction affecting climate mitigation efforts and prioritized renewable energy development to address the issues of energy security, affordability, and carbon emissions simultaneously," he explained.

Wilma Catoy, A Batangas resident who relies on fishing for livelihood, said the water sources have already been affected by the SMC's LNG plants.

"We are at risk of being displaced and we don't have resources other than fishing. If SMC continues to build more plants, us poor communities will bear the brunt," according to Catoy.

"Communities are making a stand against ridiculous electricity prices. Our authorities need to take action towards the immediate relief of Filipinos — through price control and mandating straight energy pricing," P4P's Arances said.

Make companies accountable

"Corporations emptying consumers' pockets should also be made to account," according to Arances.

He added SMC is looking at making milking cows out of all Filipinos with its push for fossil fuels, coal, and gas, which are vulnerable to price fluctuations.

SMC has asked the ERC to allow it to recover losses by passing the costs on to consumers.

"SMC Global Power claimed P15 billion in losses yet it is still driving new gas projects in Batangas and across the country," Arances added.

SMC petitioned the ERC the previous month, seeking a rate hike to let consumers pay for its losses from the use of gas and coal.

"The price adjustment seeks to let SMC change the terms of its power supply agreement with Meralco, which committed to SMC in 2019 to give consumers a fixed price on electricity," Arances held.

Sneaky steps

"Companies like SMC always make electricity for profits. They don't care if consumers prefer cheap energy that renewables can provide, continuing to push fossil fuels on us. They don't care about our laws, seeking to back out from their commitment under a public bidding process and selling electricity using outlawed PSAs. They don't care about the livelihood of fisherfolks and the environment by proposing to expand gas facilities."

"SMC already admitted gas is the cause of high prices, but it maneuvers the situation so consumers will pay for it. And here we are, having our livelihoods killed by companies like SMC yet being asked to pay more for our electricity," Tom Buitizon, chairperson of the Bukluran ng Mangingisda ng Batangas, said.

SMC plans to expand LNG projects amounting to over 14 gigawatts.

Leading the protest in Mandaluyong, Sanlakas Secretary General Aaron Pedrosa said "common sense, scientific findings, and business studies have shown that renewable energy will give Filipinos a respite from high electricity prices."

However, "such projects keep getting deferred because it does not offer the kind of profits similar to that of SMC even as its rate increase proposal will push Filipinos into deeper poverty through high electricity bills," according to Arances.

Consumers, communities, and groups under the P4P banner staged protests in various parts of the country against rising electricity costs, which plague Filipinos amid an economic crisis and high costs of living.