Higher rates as CA favors SMC

The Court of Appeals has issued a writ of a preliminary injunction in favor of South Premiere Power Corp., a unit of San Miguel Corp., effectively freezing indefinitely its power supply agreement or PSA with Meralco.

The suspension of the PSA stands until the preliminary review of South Premiere’s complaint against an Energy Regulatory Commission decision to dismiss its plea for a rate adjustment is completed.

SPPC operates the Ilijan natural gas plant which, with the Sual coal plant, is under the wing of San Miguel Energy Corporation. It has straight-pricing PSAs that do not allow costs to be passed on to monthly electricity bills.

SPPC has also obtained an injunction order from a lower court against the claim of the Power Sector Assets and Liabilities Corp. for nearly P30 billion.

The PSALM-San Miguel Corp. case involved the computation of the monthly payments for the Ilijan power plant before SPPC assumed its ownership last year.

The preliminary injunction was issued in 2015 and remains in force.

A source in the power industry described the court’s WPI as the end game for the ERC decision because of its infinite effect.

SPPC had insisted that the computation of the monthly charges be based on the fixed-price PSA with Meralco, but PSALM said the independent power producer agreement provided that it will be based on the average price at the Wholesale Electricity Spot Market, which is considerably higher.

In a message to Daily Tribune, Energy Regulatory Commission chairperson Monalisa Dimalanta said the government counsel, which is the OSG, has not yet received a copy of the WPI if indeed it has already been issued to SPPC.

“We are seeking the guidance of our counsel, OSG, on this latest resolution of the 13th Division of the Court of Appeals that granted the permanent injunction in favor of SPPC, while the 16th division earlier denied the injunction plea of SMEC,” Dimalanta said.

As of yesterday, the 13th Division ordered SPPC to post a P100 million bond to cover any and all damages that may result from the WPI should the court later decide against SPPC.

670 MW displaced

Meralco said the WPI affects the supply of 670 megawatts of electricity under the contract between SPPC and Meralco.

“With the WPI, implementation of the PSA will remain suspended until such time that the Court resolves the Petition for Certiorari filed by SPPC,” according to Meralco.

Meralco said it maintains its position that preserving the PSA serves the best interest of its customers as this would protect them from potentially higher electricity rates.

Meralco vowed it will continue exhausting all measures “and work with relevant industry stakeholders to find ways to mitigate the impact of this WPI and ensure the continued delivery of stable and reliable power to its 7.6 million customers.”

Consumer groups, meanwhile, were perplexed over the decision, as the Power for People or P4P Coalition said SMC’s petition “only asked for a suspension of the decision of the Energy Regulatory Commission and not the suspension of the power supply agreement.”

The injunction order does not serve the people, justice, or the law, P4P said.

“It does not serve the people because it exposes consumers to higher electricity prices at a time of high inflation and elevated prices of almost all basic goods,” it said.

“It does not serve justice, because it rewards those who blatantly refuse to honor their contractual obligations to the people by giving them higher profits at the expense of everyone else.”

P4P lamented that in the entire court procedure, consumers did not play a part as they are unable to comment as the process is restricted to the parties in the case.

“It is unfair that on a matter of great importance to ordinary consumers, they are denied a voice even though they are the ones who would pay San Miguel regardless of the decision of the Court of Appeals,” according to P4P convenor Gerry Arances.

Last week, Meralco’s one-month 300-megawatt emergency power supply agreement with Aboitiz-owned GNPower Dinginin Ltd. expired.

Meralco said it works with the Department of Energy and other relevant players to ensure sufficient power supply for its customers.

Under the EPSA, which took effect last 15 December, the 300MW power was derived from the new 1,336-MW GNPower Dinginin Plant in Mariveles, Bataan with a fixed price of P5.95 per KWH.

The emergency PSA partially replaced the 670 MW capacity under its agreement with SPPC.

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