Conglomerate San Miguel Corp. unveiled yesterday an extremely vague offer, seemingly as a way out of the impasse on the electricity rate increase controversy that confounded both Energy Regulatory Commission chairperson Atty. Monalisa Dimalanta and consumer groups.
The bottom line, according to both the ERC and consumer groups, is that SMC must comply with the competitive selection process and the power supply agreement that will be reactivated once the 60-day Court of Appeals temporary restraining order on the power supply agreement between South Premiere Power Corp., which runs Ilijan and Meralco, lapses.
SMC offered Meralco yesterday the use of the Ilijan plant "at minimal tariff to help stabilize power supply, and push down energy bills."
The Ilijan natural gas plant is owned by SMC unit SPPC which obtained a TRO on the ERC decision to dismiss SMC's adjustment petition that, in effect, suspended the PSA for that.
SMC said its power unit, San Miguel Global Power, has offered to make the full capacity of its Ilijan natural gas plant available to Meralco "for a fraction of its capital cost" to help keep electricity prices as low as possible for consumers while ensuring a steady supply of power in the coming months.
SMC president Ramon S. Ang said that the offer, covering the full 1,200 megawatts capacity of the plant will only cost Meralco a minimal P1 per kilowatt hour in capital recovery fee, or half of its capital cost on the facility.
Both Dimalanta and Power for People Coalition convenor Gerry Arances were iffy in their response to SMC's proposal.
Dimalanta said she needed to review the proposal "to understand better what this deal is about."
"I'm not sure I understand yet what the offer or deal is: Is it a supply offer? An asset offer/sale? If it is for supply, then Meralco already has two PSAs with SPPC for the supply (baseload and mid-merit) covering almost the entire capacity of Ilijan. These are the fixed price PSAs, one of which is subject of the current case with the Court of Appeals," Dimalanta added.
"If SMC will not get a permanent injunction or a preliminary one, then after 60 days, the PSA will be reactivated, and SMC is obliged to resume supply. Or they terminate the PSA, which means that they have to follow the ERC order and what is stipulated in the order," Arances said in response to a Daily Tribune query.
Arances conceded that the offer of SMC is low. "If it is two steps, meaning the fuel cost is not included, the outcome will be a rate lower than the level considering the high cost of fossil gas."
"This is their way to sanitize their image but SMC should first honor its obligation (in the PSA)," he said. "The PSA is just suspended. So, what will happen is that Meralco will pursue an emergency PSA. SMC should be barred from this," Arances said.
SMC move must be checked
Both individuals, nonetheless, said any supply deal has to go through CSP.
Arances said after what it did with its straight pricing PSA, that the CA TROed due to the company's petition, any move of SMC has to be scrutinized to the last detail, and doubts cast upon it.
In fact, the government should bar them from joining any power procurement unless they abide by what they entered in the first place, he said.
Ilijan was the same plant that SMC was supposed to be used for the fixed-price PSA that the CA suspended through the TRO. Unless this is resolved, SMC should not be allowed to join any CSP,
according to Arances.
The consumer group also criticized SMC's referring to liquefied natural gas as "bridge fuel." This term "has been abused by many governments, which toes the line of the gas industry," it said.
"Many studies are showing that transition from coal to renewable energy compared to coal to gas, is far more economically beneficial to the Philippines," he said.
Ang said that SMGP, through its subsidiary South Premiere Power Corp., had initial discussions with Meralco, as both firms are committed to helping consumers weather rising commodity prices, including that of power.
