NextGen Day

MANILA – The Court of Appeals temporarily terminated the power supply agreement (PSA) between the Manila Electric Company (Meralco) and the South Premier Power Corp. subsidiary of San Miguel Corp., which President Ferdinand R. Marcos Jr. described as “unfortunate” (SPPC).

Marcos repeated worries expressed by the Energy Regulatory Commission (ERC) that the CA judgment will result in higher electricity costs for Meralco customers in a press statement issued by Malacaang.

The implementation of the PSA between Meralco and San Miguel is regrettable since it will likely result in higher power prices and additional disruptions. Marcos was cited as expressing this on Saturday.

He also expressed the hope that the CA would “reconsider” its choice and take into account “the highly detrimental effect” it would have on everyday Filipinos’ access to electricity.

In response to the ERC’s denial of Meralco’s and SPPC’s combined petition for a rate increase under their 2019 PSA, the CA 14th Division granted a temporary restraining order on November 24 that is in effect for 60 days.

In its petition, the SPPC urged the CA to approve the rate “without prejudice to any additional requests for price changes for June 2022 and thereafter.”

The causes for the increase given by Meralco and SPPC were not among the exceptions that would allow for the price adjustment, according to the ERC, which said that the request was rejected since the agreed price in the PSA is fixed in nature.

Monalisa Dimalanta, the head of the ERC, had voiced concern with the CA decision, highlighting the “instantaneous” impact of the temporary suspension on the implementation of the PSA.

According to Dimalanta, “Meralco’s fixed price PSA with SPPC covers 670 megawatts of supply,” and it has protected Meralco customers from the fluctuating costs of the wholesale electricity spot market and automated fuel pass-through.

She continued, “If these PSAs are instantly suspended, this precisely puts us in the position that we at the ERC have attempted to avoid with our judgment that demanded the proper respect of the PSA provisions, including the contractually-agreed process of termination.

The ERC also expressed confidence that, due to the CA’s unique competence in the energy industry, it “would grant substantial respect, if not finality, to the regulator’s factual conclusions.”

Meralco, on the other hand, stated that it is examining the resolution while consulting with its attorneys to decide the next course of action.

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