San Miguel Corp. had just proved that it is possible to have one’s cake and eat it too by employing overwhelming influence and much more, obviously.
While the nation is on a Lenten break, the Court of Appeals released a decision favoring SMC power arm South Premiere Power Corp. by upholding the injunction order against an Energy Regulatory Commission decision.
The regulator ERC issued in October last year a denial of the petitions of SPPC and its sister company San Miguel Energy Corp to suspend power supply agreements with Meralco under a straight-pricing scheme that barred the contract holder from passing on increases in fuel costs to consumers’ monthly electricity bills.
SPPC sought temporary relief from the PSA citing the supply restrictions in the Malampaya natural gas field while SMEC said high coal prices require it to seek relief.
The CA imposing a writ of preliminary injunction or WPI on the ERC decision effectively suspended the PSA.
Lacking a supplier of power Meralco either sourced electricity from the Wholesale Electricity Spot Market which sells at a higher price or through an emergency PSA which should be a temporary deal, also at a higher tag than the original PSA.
Ironically, it was SPPC that won the emergency PSA to augment the supply lost through the CA ruling, effectively rendering the SPPC with a contract under new terms without worrying about the penalties stipulated in the PSA it abandoned.
With the indefinite WPI, which is too common in the Philippine judiciary, the CA effectively overturned the ruling of a quasi-judicial body.
Consumer groups assailed the decision as a betrayal of consumer interest since the court awarded to SMC on a silver platter what it failed to obtain through the proper channel which is through the ERC.
“SMC should not be allowed to back out and enter contracts as it pleases. If it can commit to supply power to Meralco in the guise of an emergency of its own making, it makes no sense why it could not simply be made to honor its original contract in the first place. The CA and all our energy authorities should not turn a blind eye to these brazen acts from SMC,” according to the consumer group Power for People Coalition.
Since the CA consolidated the cases of SPPC and SMEC into the division hearing the SPPC case, the WPI should also apply to SMEC, the operator of the Sual coal plant.
Another CA division earlier denied a temporary restraining order regarding the ERC ruling on SMEC which was shortly after President Ferdinand “Bongbong” Marcos Jr. called out the CA expressing his worry about the TRO’s effect on electricity bills.
Lost in the court’s assent to SMC’s plea was the ERC decision favorable to consumers.
In denying the petitions to suspend the PSAs of both SMC subsidiaries, the ERC stood firm that the “two PSAs are financial contracts” in which the provisions should be honored.
It denied the invoking of the “change in circumstances” proviso in the PSA saying that the conditions that SMC invoked in its petitions did not satisfy the requirements to avail of it.
The particular provision cited unavoidable factors such as the issuing of a law that affects the contract or a sudden spike in costs.
Other power companies holding the same contract dealt with the price increases.
The main point of the ERC was that had it given in to the SMC appeal, other holders of the straight-pricing PSA including SMC are expected to file similar petitions to suspend the terms of the contract.
The ERC decision boiled down to the sanctity of contracts which the CA ruling effectively trashed.