The Energy Regulatory Commission (ERC) recently released decisions approving approximately P31.34 billion in cost recoveries for several power generation companies, including significant portions for San Miguel Global Power (SMGP) subsidiaries such as South Premiere Power Corp., worth P15.8 billion for its gas plant, and Sual Power Inc., totaling P13.3 billion for its coal plant. This was an extension of a capitulation after a bruising court battle that started in 2024, Nosy Tarsee learned from players in the energy sector.

Consumer groups such as Power for the People (P4P) complained to Nosy Tarsee that the recent calls for investigations into “corruption and collusion” in the energy field amplify accusations of regulatory capture, a recurring theme in San Miguel Corp.’s energy unit’s dealings with the ERC, where court wins for power firms have undermined ERC efforts to curb rate hikes. 

The approvals, issued in late January 2026, allowed generating firms to pass on fuel cost surges from 2021 to 2022, supposedly caused by Indonesia’s coal export ban and the Russia-Ukraine conflict, through staggered rate hikes of about P0.2816 per kWh over three years.

The consumer backlash ties into the longstanding friction between San Miguel Power Corp. (through SMGP) and the ERC over power supply agreements, which has involved multiple rounds of regulatory denials, contract terminations, legal challenges and cost recovery battles.

The tensions escalated when the ERC rejected or terminated several high-priced PSAs of SMGP subsidiaries from 2022 to 2023, citing insufficient competitive selection processes or “no basis” for rate hikes amid volatile fuel costs.

SMGP voluntarily ended some 2024 to 2025 deals with Meralco in 2023, arguing force majeure due to fuel supply issues, but this led to disputes over unrecovered costs.

San Miguel and Meralco challenged the ERC’s terminations in court, culminating in a Supreme Court ruling that upheld the Court of Appeals’ decision in SMGP’s favor against the regulator’s 2023 decisions.

The overturned ERC rulings paved the way for SMGP to pursue recoveries for incurred fuel costs from the soured deals. By March 2025, SMGP formally sought around P34 billion in relief from the ERC to compensate for “unforeseen events” such as fuel price spikes.

Throughout 2025, friction continued, with the ERC issuing a show-cause order against SMGP’s Ilijan gas plant for a 2022 outage, which SMGP rejected as invalid, claiming it stemmed from uncontrollable gas supply constraints.

In August 2025, SMGP publicly criticized orders issued by the former ERC chief as a “parting shot,” further escalating friction.

However, by September 2025, the ERC approved original rates for new Meralco PSAs with SMGP and others, highlighting inconsistent regulatory stances.

Trade groups such as the Philippine Chamber of Commerce and Industry urged a “balanced approach” to SMGP’s P34 billion claim, emphasizing economic impacts.

The ERC’s January 2026 approval of the P31.34 billion recoveries, including P29.212 billion specifically for San Miguel’s 2019 PSAs, represents the culmination of these disputes, where SMGP successfully argued for “changes in circumstances” adjustments.

Critics say the ERC is prioritizing corporate interests over consumers, echoing earlier warnings about the risks of coal and gas contracts. They say this builds on the friction by highlighting how terminated or adjusted PSAs have repeatedly shifted billions in costs to households, such as the additional P56 to P85 monthly for average users, on top of prior P5.1 billion San Miguel recoveries.

In essence, this approval is not isolated but a flashpoint in a multiyear saga of regulatory pushback, legal reversals and cost pass-throughs, underscoring the challenges in balancing energy security, fossil fuel volatility and consumer protection in the Philippines’ power sector.