Court rejects SMC move to hike rate in 2019 power deal

By Jordeene B. Lagare@jordeenelagare

January 28, 2023 12:00:00

The Manila Electric Co. (Meralco) will continue to pay a lower price for a power contract inked in 2019 after a court rejected a move by a unit of San Miguel Corp. (SMC) that would have subjected the deal to a readjustment.

Meralco welcomed the decision, saying it would benefit customers "as it ensures supply continuity and protects them from further exposure to potentially higher electricity rates."

The 16th division of the Court of Appeals denied a petition of San Miguel Energy Corp. (SMEC) seeking to halt an Energy Regulatory Commission (ERC) ruling in September that quashed the joint power rate hike of the two power firms.

The 2019 supply contract between SMEC and Meralco was priced at P4.6314 per kilowatt-hour (kWh) covering 330 megawatts. SMEC had asked ERC for an additional P0.30 per kWh to recover the rising costs of operations amid skyrocketing coal and fuel prices as war continued between Russia and Ukraine.

Quoting the appellate court's ruling, a statement from the ERC read: "[The] writ of injunction will give SMEC the unrestricted power to terminate, at its own will, the power supply agreement to the detriment of public consumers."

Status quo

The ERC added: "According to the appellate court, ERC's denial of SMEC's motion for price adjustment already preserves the status quo—which is the contract price in SMEC and Meralco's power supply agreement."

A halt order, according to the court, would not have sufficed at this time since "there is a need for an extensive determination of the merits of SMEC's case," the regulator said.

Legal remedies

SMC Global Power Holdings Corp., the parent firm of SMEC, said it would "pursue all available legal remedies in line with our fiduciary duties to our stakeholders." SMC Global is the power arm of the listed conglomerate.

"We remain confident that our government, through the judiciary, is one with us in promoting an environment where both consumers and industries collaborate in delivering on our country's energy goals and providing viable and shared solutions to address the ongoing power crisis," it added. INQ