’Blanket force majeure’ urged on power plants

Published August 2, 2020, 10:00 PM

by Myrna M. Velasco

 A blanket enforcement of force majeure (FM) claims on supply deals with power producers had been sought so that electricity rates to be passed on to consumers can be brought down.

Advocacy group Laban Konsyumer Inc. (LKI) cited the experience of Manila Electric Company (Meralco), wherein its move invoking force majeure claims with power suppliers effectively reduced its power rates.

LKI President Victorio Mario Dimagiba said that such must be broadened so all power producers operating nationwide could be covered.

Dimagiba primarily directed his plea to the Philippine Independent Power Producers Association Inc. (PIPPA) and the Energy Regulatory Commission (ERC) to help reduce electricity rates for consumers especially with the lingering community quarantine declarations of the government.

He opined that one way to do that is for power plant owners to agree to DUs’ invocation of force majeure claims – similar to what Meralco had done with its power supply agreements (PSAs).

Dimagiba bewailed though that the “ERC and PIPPA are mum, and continue to remain silent and resistant, hesitant and uncooperative on the topic of force majeure invocation.”

He added that on PIPPA’s alley, the group of the power producers “rejected our earlier plea, proposal and letter,” narrating that “we wrote them twice and proposed that force majeure be implemented around the country, but both regulator and PIPPA did not give us or the proposal the time of day.”

Dimagiba pointed out “we are making this statement once again to keep the pressure against the inaction of PIPPA members and the ERC in what could be an example of regulatory capture.”

 As he has been wishing so, the LKI chief emphasized that “they should follow the example of what Meralco did in its franchise area.”

 From the time that the country’s biggest power utility firm had started invoking force majeure claims on its supply deals since April, this already generated P1.8 billion savings to its 6.9 million base of customers.

Essentially, that resulted in lower rates pass-on to Meralco customers; and there had been instances that the force majeure claims reversed increases in its tariff, such as what happened in July – when the initial assessment was an increase, but the FM claims brought down the rates pass-on overall.

“Right now, the force majeure claims of Meralco in its franchise area is very effective and can act as a jump-off point or peg for other parties willing to join the mission to better serve customers…thus, we demand that ERC and PIPPA members immediately look into the situation and assess leading the charge and making all DUs and ECs (electric cooperatives) follow suit on what was done in Metro Manila and do their own execution of FM claims,” Dimagiba stressed.