Rates stable despite ERC okaying petitions

The Energy Regulatory Commission, or ERC, on Thursday assured consumers that the granted price adjustments and contract termination of the Manila Electric Co., or Meralco, and Panay Energy Development Corp., or PEDC, will not immediately result to a power rate hike.

In a decision dated 8 March and released only last 29 August, the ERC approved the Joint Motion for Contract Price Adjustment with Motion for Confidential Treatment filed by Meralco and PEDC in ERC Case 2022-001 RC.

The decision, according to ERC, also granted their Joint Urgent Motion for the Termination of the Power Supply Agreement or PSA via a 3-2 vote —with ERC Chairperson and CEO Monalisa Dimalanta issuing a separate opinion and Commissioner Catherine Maceda issuing a dissenting opinion.

Impact not immediate

"There will be no immediate impact on rates because Meralco will still need to apply in their true-up adjustment petition," Dimalanta said in a text message.

"This means that any price adjustment will really depends when the true-up petition is filed. We will only know then if adjustment is up or down because it will be filed with other adjustments," the ERC chief explained.

The Price Adjustment Motion was filed by Meralco and PEDC on 20 January 2022 citing the "Change in Circumstance" provisions in their PSA.

The two companies argued that the increase in the global cost of coal or fuel prices last year prompted PEDC to endure more than P962 million in losses as of September 2022.

However, the ERC computation based on the document submitted by the parties, showed that the actual loss was only about P884 million to date.

Subsequently, on 23 June 2022, Meralco and PEDC filed the Termination Motion due to PEDC's inability to meet its contractual obligations due to losses incurred.

In granting the price adjustment petition, the Commission was unanimous in the finding that the PSA, in this case, allowed for price adjustments in case of an "extraordinary event…that results in an increase of actual fuel costs from the fuel prices at the time of bid submission…", under certain conditions.

Most of the Commission ruled that such conditions specifically defined by the "Change in Circumstance" provisions found in the PSA were present in this instance.

As outlined in the PSA that Meralco and PEDC signed, the parties had the option to terminate at the instance of a "Change in Circumstance", as in this case.

Meanwhile, Dimalanta noted in her Separate Opinion that, by filing the Termination Motion before the Commission decided on the Price Adjustment Motion, the parties are deemed to have abandoned their request for price adjustment. Hence, it can no longer be acted upon by the Commission.