Epic triumph
SMC’s 14.1 GW of proposed projects account for half of the planned gas expansion in the Philippines and is also by far the largest in the region for one company.
Text size
Share
Daily TribuneSMC’s 14.1 GW of proposed projects account for half of the planned gas expansion in the Philippines and is also by far the largest in the region for one company.
Share
At the ongoing 2022 G20 Summit in Bali, Indonesia, the Philippines was cited as having been victorious in upholding the welfare of the public in terms of keeping electricity rates down.
At the side event of the assembly of leaders of the biggest economies in terms of wealth and population, the recent decision of the Energy Regulatory Commission dismissing the rate hike petition of San Miguel Corp. energy arm SMC Global Power was celebrated as a "consumers' historic win."
In the presentation of the sustainability group Center for Energy, Ecology, and Development in a side event of the summit that took up the involvement of rich G20 members in the boom of fossil gas and liquified natural gas in Southeast Asia, the ERC decision was made a showcase of global successes in resisting big businesses from milking huge profits from fossil gas operations.
"The rich, polluting countries are the cause behind SEA's climate transition handicap and rising electricity prices across the region," CEED Deputy Executive Director Avril de Torres said.
The group's report said Vietnam leads the region's planned gas expansion, with 56.3 gigawatts in pre-construction and construction stages followed by the Philippines with 29.9 GW in development.
SMC's 14.1 GW of proposed projects account for half of the planned gas expansion in the Philippines and is also by far the largest in the region for one company.
The report said the ERC denied the motions for price adjustment citing provisions from the contracts that did not support claims of SMC Global Power units South Premiere Power Corp, and SMC Energy Corp.
"SMC Global Power, through its subsidiaries SPPC and SMEC, filed separate motions for price adjustments to cover a fraction of the incurred losses amidst the increasing price of imported thermal coal and supply disruption in Malampaya," according to the report.
It indicated that the move was mainly driven by imposed straight or fixed energy pricing structures in the power supply agreements entered into by SMC and Meralco.
"Under the said tariff structure, the risks from fuel cost, currency exchange, and consumer price index are assumed by the generation companies, as opposed to the pass-through structures where consumers bear the burden of fluctuations," the report added.
It recounted how ahead of the regulator's ruling, "SMC expressed its intention to terminate the PSAs with Meralco if ERC would not grant its requests for price adjustment."
The report continued that the ERC denied the motions "citing provisions from the contracts that did not necessarily support the claims of SPPC and SMEC."
Also cited in the report was ERC's reminder to SMC's units "of their obligations under the PSAs, which they entered into of their own free will" and their duty to provide electricity at the least cost manner.
After years of regulatory capture, the ERC showed that it is capable of ruling in favor of consumers' welfare, which to the global community is a breath of fresh air.
