Ban ‘unreliable’ SMC unit — P4P
Instead of obtaining a contract, San Miguel Corp. power plant unit South Premiere Power Corp. should have been banned from the Meralco auction after it arbitrarily abandoned a power supply agreement under the cover of a Court of Appeals, or CA, temporary restraining order, or TRO, a coalition of consumer groups said.
The CA, in late December, issued a final decision rejecting the Energy Regulatory Commission’s dismissal of two petitions from SMC subsidiaries for a “temporary” rate increase to collect P5.2 billion in losses.
The ERC rejected the petitions because SMC could not show sufficient proof that the PSAs with Meralco, which set fixed rates instead of passing on fuel costs to consumers, should be changed.
The ERC and consumer groups are set to take the case to the Supreme Court.
In a statement, consumer group Power for People Coalition, or P4P, questioned the Meralco decision to award a 1.2 GW power generation contract last week to SPPC, pointing out that the company should not have been allowed to participate in the bidding in the first place.
The power plant operator, which is under the wings of SMC power unit San Miguel Global Corp. won the deal after a competitive selection process, or CSP, after previously walking away from its fixed-price contracts with Meralco for the same Ilijan power plant, alongside its Sual coal plant.
The difference, according to P4P, is that the new contract enables SMC to pass on fuel costs to the monthly bills, which would expose consumers to expensive and volatile electricity prices.
“This new contract sees Meralco locking itself in a toxic relationship with SMC, ignoring red flags raised by consumers. SMC already broke off from their previous contract, Meralco should not have given them a second chance,” P4P Convenor Gerry Arances said.
According to the group, the 1.2 gigawatt, or GW, CSP and the earlier 1.8 GW CSP of Meralco also proceeded without having resolved concerns raised by consumers, including the terms seemingly having been tailor-fit to exclude most power suppliers, especially renewable energy, or RE, sources that can only offer smaller total capacities.
Likewise, it pointed at the exclusivity of the 1.2 GW CSP for gas, despite the absence of a law that allows for a gas-exclusive contract. SMC’s Excellent Energy gas plant was also awarded a PSA in the 1.8 GW CSP.
The terms allowed San Miguel, which terminated its fixed-price contracts last year, to benefit from Meralco’s efforts to secure replacement capacity, alongside other fossil fuel-based power plants.
The replacement was for the shortfall that resulted from the SMC power units’ withdrawal from the PSAs.
“SMC is only back in the picture now because they saw an opening to generate more profits, an opening that they themselves helped create,” Arances said. The new PSAs will also be questioned before the Department of Energy, or DoE.