In petitioning for rate hikes that would result in a spike in monthly bills, SMC Global Energy, the electricity producer of conglomerate San Miguel Corp., never presented a proof of the losses it wanted recovered.
The Energy Regulatory Corp. recently turned down the petition of the SMC subsidiary to increase its contracted rates ruling that it holds straight energy price power supply agreements that do not allow adjustments.
Based on its petition, SMC said it incurred P15 billion in losses due to the rising price of coal and the supply restrictions from the Malampaya gas field.
ERC’s recent decision indicated that SMC did not present hard proof and even presented evidence saying it “determined that figures cited in the presentations appear to be misleading and may have been deliberately picked to justify the claims, perhaps to create a view that the denial of the motion will instantly and inevitably subject consumers to significantly higher passed-on charges.”
SMC Global Power proposed to effect an increase by as much as 1.4825 per kilowatt hour for the 26 January to 25 February 2002 billing period representing a 35 percent increase in its rates.
For the billing period 26 April to 25 May, an adjustment of P1.2362 per kilowatt hour was sought, thus bringing its blended rate to P5.5606 per kWh from just P4.3077 per kWh for that period.
Both claims were allegedly for recovering the difference in the contract price and the prevailing prices during the subject periods.
No solid evidence was presented for the price claims. The ERC stated that the “corresponding data thereof is yet is yet to be generated or gathered as of date . . .(instead) it is based on the high probability that a claim for change in circumstances will also be put forth for the subject billing period.”
SMC Global Power is claiming recovery of P1.512 billion just for the billing periods from last January to May even if “they had yet to provide incontrovertible proof “that such costs have indeed been incurred.”
No let up
ERC also expressed its apprehension that if SMC Global Power gets what it wanted without presenting hard evidence, “there will be subsequent filings by the parties for adjustments.”
The regulator said what is clear is that there “is no basis for such relief under the PSA for it is in the nature of a financial contract with a fixed price.”
One of the SMC units that filed for a PSA price adjustment was San Miguel Energy Corp. which sought P4 per kWh increase in rates to cover higher prices of coal.
SMEC, despite the ample opportunity given to them, failed to submit evidence on its financial health.
It did not even submit any basis for the computation of its losses and the proposed price adjustment., the oppositors noted during the ERC proceedings.
During the hearings, SMC presented one witness who did not even explain how the company missed the unprecedented spike in coal in its business forecast.
He also failed to give substance to the claim of the company and how its service has “become so difficult as to be manifestly beyond the contemplation of the parties, the court or any tribunal should authorize the release of the obligor in whole or in part.”
Instead of offering proof, SMC Global Power threatened ERC that it will terminate the PSAs with Meralco that would result to the electricity grid losing 1 gigawatt-hour of power or equivalent to the capacity of three base load plants.