SC upholds CA power row ruling

Following the Supreme Court’s decision to reject the petition of the Energy Regulatory Commission (ERC) to overturn the Court of Appeals (CA) ruling in favor of San Miguel Corp.’s (SMC) power units, consumers face an impending increase in power rates. 

The decision allows SMC to discontinue its power supply agreement with Manila Electric Co. (Meralco), which is anticipated to impact the electricity rates that consumers will shoulder. 

The SC decision which was yet to be released to media was divulged by SMC to the Philippine Stock Exchange through a disclosure dated 22 May 2024 signed by Ferdinand K. Constantino, corporate information officer.

“Further to the disclosure of San Miguel Global Power Holdings Corporation on 17 January 2024 relating to the petition for review on certiorari filed by the Energy Regulatory Commission with the Supreme Court after the Court of Appeals, in its resolution dated 28 December 2023, denied the motions for reconsideration filed by the ERC and the National Association of 2 Consumers for Reforms Inc. and upheld the earlier decision of the CA, dated 27 June 2023,” according to the report.

SMC said it has received a copy of a Resolution from the SC, issued on 3 April 2024, through its counsel, Poblador Bautista and Reyes Law Offices. 

Reversible error not shown

SMC said the Resolution, from the First Division of the Supreme Court, stated that SC denied the ERC’s petition, affirming the CA’s decisions from 27 June 2023, and 28 December 2023. 

Based on a portion of the resolution in the SMC report, the SC concluded that the ERC failed to demonstrate any reversible error by the CA, and thus, the High Court will not exercise its discretionary appellate jurisdiction.

In a separate statement, Meralco said it is still waiting for a copy of the SC Resolution but noted that it is ready to comply with the Court’s decision, subject to exhaustion of available legal remedies by the involved parties in the case.

Meanwhile, ERC chairperson and CEO Monalisa Dimalanta declined to comment on the decision pending the receipt of the decision.

According to the People for Power Coalition (P4P), however, the decision of the High Court favors an electricity rate hike that will hurt the pockets of the consumers. 

“With this decision, the SC has opened the door for the unabated exploitation of consumers, as energy companies would surely use this precedent in their inevitable rate hike requests,” P4P convenor Gerry Arances said in a statement.

“Consumers will absorb the full force of price fluctuations on fossil fuels in the world market while energy companies reap the profits,” he added. 

Last year, SMC won a ruling from the Court of Appeals, which reversed the ERC decision denying its petition to raise prices from its Ilijan gas and Sual coal power plants. The company terminated several PSAs with the Meralco that have fixed rates.

In 2023, SMC filed a petition with the ERC to raise prices, intending to collect an additional P5 billion from consumers. However, the petition was denied due to a clause in the contract that changes in rates.

In 2022, SMC’s San Miguel Global Power Holdings Corp., filed a rate increase to recover P5 billion of its P15 billion in losses incurred due to a change in circumstances.

The ERC denied the petition, saying its power supply agreement with Meralco had no basis because the contract is a fixed-rate deal. 

SMC filed an appeal with the CA, where the appellate court reversed the ruling of the ERC.

Local PSAs are won by power generation companies through a competitive selection process (CSP) that involves a transparent and competitive bidding system, where a power supplier is chosen to supply the electric power requirements of a distribution utility like Meralco.

The CSP policy aims to prioritize the needs of the consumers, as per the Distribution Development Plan and Power Supply Procurement Plans of the DUs.