SMC eyes new power service agreements
San Miguel Corp. energy arm SMC Global Power issued ambiguous signals yesterday regarding its threat to terminate its supply contracts with Meralco saying that it will not disrupt supply but at the same time it is seeking to corner the offers for emergency power agreements with distributor Manila Electric Co.
In a statement, SMC Global Power said it will do everything it can "to make sure Meralco's energy supply is not disrupted."
"Despite the present challenges, we will never withhold our available power capacity to the detriment of the country and the consumers," according to the company.
In its petition for price relief that the Energy Regulatory Commission turned down, SMC Global Power, however, threatened to terminate the power supply agreements of South Premiere Power Corp. which runs the Ilijan natural gas plant, and San Miguel Energy Corp which operates Sual coal plant if the regulator turns down its petition for price relief.
The ERC, in a 3-2 vote, denied the petition of SMC Global Power for a P4.80 increase in the contracted prices of the Sual coal plant and Ilijan natural gas plant.
A total of 1 gigawatt, or the equivalent capacity of three base load plants, will be removed from the power grid if the PSAs are discontinued.
Not giving up
SMC is not yet ready to give up the battle to secure the power regulator's approval for the rate hike petition.
Despite its assurance not to terminate its power supply to Meralco, the SMC units are top bidders for emergency PSAs, pending the approval of the Department of Energy.
Based on data from Meralco, five generation companies signified interest to supply a total of 1,070 megawatts of power to the distribution utility.
These are SEM-Calaca Power Corp. (200 MW); GNPower Dinginin Ltd. Co. (300 MW); Masinloc Power Partners Co. Ltd (250 MW); SMC Consolidated Power Corp. (200 MW) and South Premiere Power Corp. (120 MW).
Of these, three GenCos, Masinloc, SMC Consolidated, and SPPC are owned and controlled by SMC. These firms will offer a combined capacity of 570 MW.
Despite SMC's threat, Meralco vowed to "exert all available remedies to prevent termination of the PSAs" with SPPC and SMEC.
Legal options open
SMC Global Power said it will exhaust remedies available to it in contesting the ERC ruling.
"Given the circumstances, we will continue to explore other legal remedies to allow us to sustainably provide for the increasing power needs of our country while meeting our obligations to our various stakeholders."
SMC Global Power had claimed losses of P15 billion from the operation of the two electricity generation companies due to the rising prices of fuel primarily coal and the supply restrictions in the Malampaya natural gas plant.
"We regret the ERC's denial of our joint petition with Meralco for temporary relief on our 2019 power supply agreements, not so much for our interest but more for the consumers," according to the SMC subsidiary.
It said the temporary ERC relief would have enabled it "to preserve few of the last remaining fixed-rate PSAs of Meralco that are responsible for keeping power rates in Metro Manila low compared to other parts of the country, amid surging global fuel prices."
The SMC unit said that computations bear out the benefit of the granting of its petition.
"Based on Meralco's computation, which was validated by ERC's Regulatory Operations Office, the interest of the consumers would have been best served with the approval of the petition."
It claimed the ERC confirmed that the commission does not have any other data or information that could contradict or disprove the computations and simulations submitted by Meralco.
"We believe these numbers speak for themselves," according to SMC Global Power.
"The ERC, armed with such data, knows too well that denying the petition will not only cripple us but more importantly, burden consumers who will have to face higher electricity bills," it noted.
SMC Global Power said it remains focused on maximizing its power assets to help sustain the economy's recovery while investing in technologies that will facilitate our transition to cleaner energy.
Contesting the ruling
SMC Global Power said it will exhaust remedies available to it in contesting the ERC ruling.
"Given the circumstances, we will continue to explore other legal remedies to allow us to sustainably provide for the increasing power needs of our country while meeting our obligations to our various stakeholders."
SMC Global Power had claimed losses of P15 billion from the operation of the two electricity generation companies due to the rising prices of fuel primarily coal and the supply restrictions in the Malampaya natural gas plant.
"We regret the ERC's denial of our joint petition with Meralco for temporary relief on our 2019 power supply agreements, not so much for our interest but more for the consumers," according to the SMC subsidiary.
It said the temporary ERC relief would have enabled it "to preserve few of the last remaining fixed-rate PSAs of Meralco that are responsible for keeping power rates in Metro Manila low compared to other parts of the country, amid surging global fuel prices."
The SMC unit said that computations bear out the benefit of the granting of its petition.
