Consumer groups warn economic sabotage raps if SMC quits contract

Consumer groups said they will fend off efforts of San Miguel Corp. to appeal the Energy Regulatory Commission ruling that denied the petition of the conglomerate’s energy unit to increase electricity rates by P4.80 per kilowatt hour.

The groups which are the oppositors against the SMC Global Power petition have warned that they will seek economic sabotage charges if the company unilaterally terminates its power supply agreements with Meralco.

In a 3-2 decision last Thursday, the ERC dismissed the petition of SMC Global Power to adjust its contracted prices.

Consumer group Power for People Coalition said it is waiting for the next move of SMC Global Power following the denial of the petition to raise the contracted prices of the Sual Coal Plant and Ilijan Natural Gas Plant.

In a media briefing, P4P legal counsel Avril de Torres said they are prepared for any action that the SMC will do next, including a motion for reconsideration.

“But we at the P4P, we are ready to file again our opposition and objection for their MR. We are glad that most of the legal basis for the denial mentioned by the ERC is also the same as the legal arguments cited by P4P. We believe that any motion filed by SMC will be deemed baseless anew by the ERC commissioners,” she said.

P4P convener Gerry Arances also aired hopes the SMC will not resort to nullifying the PSAs.

“Even before the release of the decision, SMC has already issued threats of cutting off the power supply to consumers,” he said.

“We’ve had enough of this blackmail, and call onto the ERC and Department of Energy to hold SMC accountable for economic sabotage should it really back out of its contractual obligations to provide power to consumers,” said Aaron Pedrosa, secretary-general of Sanlakas, a member-organization of P4P.

De Torres maintained that Meralco can impose penalties against SMC if it suddenly stopped supplying power, amounting to P1,000 per kilowatt-hour or a total of P255.5 billion for the remaining duration of seven years in the PSAs.

The P4P convener also said that SMC entered into a straight or fixed-price PSA in 2019 for the supply of electricity from the Sual coal-fired power plant and the Ilijan LNG plant.

SMC, claiming losses of over P15 billion, made the petition to escape the fixed price clause and make consumers foot the bill for their chosen fuel, alleging that it could not have foreseen the price spikes in the world market.

In a statement on Tuesday, Meralco said that it will comply with the ERC decision and vowed to “exert ALL available remedies to prevent termination of the PSAs” with South Premiere Power Corp. and San Miguel Energy Corp.

However, Meralco’s head of regulatory management lawyer Jose Ronald V. Valles said in case the SPPC and SMEC fail to deliver power to Meralco “for whatever reason,” the power distributor will be “constrained” to source up to 1,000 megawatts from the spot market, which will be more expensive than the normal PSAs.

“We already sought offers and entered into emergency power supply agreements with other generation companies to ensure continuity of stable, reliable, and adequate supply to Meralco customers,” Valles said.

“We are hoping for the swift action of the DoE in exempting the EPSAs from undergoing CSP. Without these EPSAs, our customers may become exposed to volatile prices,” he added.

DoE backs ERC decision

In a separate statement on Tuesday, the Department of Energy said it “respects the independence, responsibility, and authority of the ERC to hear and resolve cases brought before it consistent with its Charter, the Electric Power Industry Reform Act or EPIRA.”

“The Department is highly confident that as responsible corporate citizens and business entities imbued with the public interest, San Miguel Power and Meralco will be guided accordingly by the ERC Order and ensure uninterrupted power supply to our people and the country, notwithstanding the denial of their joint petition,” it said.

Lack of merit

In its decision, the ERC noted that SPPC and SMEC can source their commitment under the PSA from other, possibly cheaper sources.

ERC chairperson lawyer Monalisa Dimalanta added that the commission did not find a basis to approve the proposed recovery of billions of pesos due to SMC’s admission that the “corresponding data thereof is yet to be generated/gathered as of date.”

The ERC chief also noted that the rate hike forecast of SMC Global Power in its petition is P1.27 per kilowatt-hour higher than the commission’s actual evaluation and computation based on historical data in the spot market.

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