San Miguel Corp. (SMC) subsidiaries Sual Power Inc. and South Premiere Power Corp. (SPPC) have legally secured the approval of the Supreme Court to terminate their power supply agreements (PSAs) with Manila Electric Co. (Meralco) due to changes in circumstances (CICs).
In a stock exchange disclosure on Tuesday, SMC confirmed it received a copy of the Supreme Court’s resolution dated 10 July 2024, which denied with finality the Energy Regulatory Commission’s (ERC) motion for reconsideration.
TRO request denied
The court rejected the ERC’s petition, filed through the Office of the Solicitor General (OSG). It denied requests for a temporary restraining order and/or writ of preliminary injunction due to lack of merit.
The Supreme Court’s ruling establishes CICs as valid grounds for terminating PSAs.
ERC chair Monalisa Dimalanta, for her part, said the ERC has yet to receive a copy of the Supreme Court decision and will assess its implications, including potential monetary claims.
Changes in law, economic conditions
In October 2022, SMC’s subsidiaries, Sual Power Inc. (formerly San Miguel Energy Corp.) and SPPC terminated their PSAs with Meralco due to changes in law and economic conditions.
Before this, SMC and Meralco had sought a temporary rate hike due to rising fuel costs but were denied by the ERC, leading to the PSA revocations.
The PSAs were initially secured in 2019 through a competitive selection process, with SMEC agreeing to supply 330 megawatts (MW) and SPPC providing 670 MW at an all-in rate of P4.6314 per kilowatt hour (kWh).
The agreements were effective 26 December 2019, for a 10-year term but were terminated in October 2022.