DoE won’t fold to SMC pressure

The government is not bending to the pressure conglomerate San Miguel Corporation is applying through the rate increase petitions of its energy unit running the high-capacity Ilijan and Sual power plants.

The Department of Energy expects the Energy Regulatory Commission to come up with a fair and sound decision on the pending pleas of SMC Global Power Holdings Corp. which was supposedly aimed at recovering some P15-billion losses it incurred as a result of soaring fuel prices and natural gas supply restrictions.

“We are looking at what is fully covered by the mandate of the regulatory agency and what is properly the policy which is covered by the DoE’s mandate. We will be issuing a clarification on this matter to guide the public soon,” Energy Secretary Raphael Perpetuo Lotilla said in an interview on Thursday.

SMCGP threatened to terminate two of its power supply agreements with Manila Electric Company if it fails to obtain the ERC adjustments.

SMCGP president Ramon Ang said South Premiere Power Corp., which operates Ilijan; and San Miguel Energy Corp., which runs Sual, have issued notices to Meralco terminating the PSAs, citing unexpected and unprecedented “change in circumstances.”

SMCGP warned the termination will be effective 4 October in the event the ERC denies its petition.

Fat profits

Consumer groups cited SMGP’s huge profit of P17.9 billion from last year up to the first quarter of 2022 against its rate hike petitions that would be taken from ordinary consumers “with a pitiful minimum wage of P570 per day.”

“It’s as if San Miguel is passing the hat around and expects electric consumers to pitch in for them,” Power for the People convenor Gerry Arances said.

Based on data and analysis of the think-tank Center for Energy, Ecology, and Development, should ERC grant SMC’s motion for a price adjustment, consumers will be saddled with higher monthly bills from P33.76 to as much as P168.80 per month.

For a household that consumes 200 kWh, an additional P67.52 is expected on power bills or P48 for SMEC and P19.52 for SPPC.

“If ERC decides in favor of SMC, it is unfathomable that they see more weight in the woes of a billions-earning company than that of a simple Filipino. To borrow the words of United Nations Secretary-General Antonio Guterres, that is grotesque greed,” Arances added.

Consumer group National Association of Electricity Consumers for Reform, Inc. also warned that acting on the rate hike petition will be detrimental and unfair to power consumers.

“SMC should absorb the alleged losses because the Power Supply Agreement they were referring to in their petition was approved by the Energy Regulatory Commission. Thus, it does not allow price adjustment,” NASECORE president Pete Ilagan said in an interview on Tuesday.

Ilagan also said the ERC, now headed by Atty. Monalisa Dimalanta, should dismiss the motion of the company or else it will only give “undue advantage to SMC” to the “detriment of electricity consumers.”

Lessons need to be learned

SPPC’s Ilijan plant committed 670 megawatts to Meralco for 10 years from 26 December 2019 to 25 December 2029. SMEC’s Sual plant committed 330 MW to Meralco for the same period.

Meralco said if ERC fails to act on SMCGP’s petition and the termination pushes through, electricity prices in Metro Manila and nearby provinces may jump by as much as 30 percent starting October.

The company said its Sual coal and Ilijan natural gas power facilities logged combined losses of P15 billion from 2021 to date due to high global coal prices and unilateral natural gas supply restrictions from Malampaya.

The company asked the Energy Regulatory Commission for a rate increase from January to May of P0.80/kWh (from P4.3 to P5.1/kWh) for its 670 MW of contracted baseload capacity from the Ilijan plant and an average of P4.0/kwh (from P4.3 to 8.3/kWh) for the 330 MW contracted baseload capacity of the Sual plant.

“There are lessons to be learned from this situation, and I would not want to preempt the ERC because they are studying this issue imminently. We will study this issue as well based on the mandate of the DoE. All questions are valid and I am confident that the ERC will come out with solutions in due time,” Lotilla said.

In a statement, SMCGP warned that power rates may increase by as much as 30 percent by October in case the ERC failed to act on its petition for a temporary hike for its two power supply agreements with Meralco.

“The war in Ukraine has taken prices far beyond what we and Meralco could have even imagined in 2019 when we signed the PSA. At the time, the forecast for coal was only $65 per metric ton for 10 years. It is already at $400/MT,” SMC’s Ang said.

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