The Energy Regulatory Commission (ERC) will render its ruling on the highly contentious P0.30 per kilowatt hour (kWh) rate hike application that had been jointly lodged by the Manila Electric Company (Meralco) and its power supplier SMC Global Power Holdings Corporation (SMCGP) of the San Miguel group.
No less than ERC Chairperson Monalisa C. Dimalanta had confirmed that they will issue a decision prior to the October 4, 2022 timeframe when SMCGP has been planning to terminate its power supply agreements (PSAs) with Meralco for power capacities being supplied by its Ilijan gas-fed and Masinloc coal-fired power plants.
The ERC chief though has not hinted on the tenor of their verdict on the Meralco-SMC rate hike petition, as she told media to just “wait for the decision to come out.”
In August, SMCGP announced that it already issued notices of termination for its PSAs with Meralco effective October 4 “if no relief is given” by the ERC to restrain continued losses that the power company has been incurring due to the skyrocketing fuel prices in the world market.
The SMC energy firm indicated that it already logged staggering losses of P15 billion for the capacity it has been supplying to Meralco from its Ilijan and Masinloc plants due to surging prices of coal as well as gas prices in the global market.
Of the aggregate losses, SMCGP stated that it is just opting to recoup leaner fraction of P5.2 billion from January to May this year via its rate hike petition, while absorbing the chunk of roughly P10 billion of foregone revenues.
“SMCGP has sought for a temporary and partial cost recovery relief only for the losses it incurred from January to May 2022, in the form of a rate increase on its contract capacity under the PSAs to be amortized over a period of six months,” the applicant-firm stressed.
The power firm, in particular, noted that when it sealed its PSAs with Meralco in 2019, coal prices in the world market had been swinging from $60 to $65 per metric ton, but because of the prolonged Russia-Ukraine war, prices of that fuel commodity soared to as high as $440 per metric ton.
International gas prices had been similarly situated, and that has been aggravated by the "gas restriction dilemma" of the Malampaya gas production facility which had worsened last year because of the field’s depleting state.
SMC President and CEO Ramon S. Ang said “unfortunately, those prices have increased by over 500-percent since then. We are not asking to recover all our losses, neither are we asking for a permanent increase. We want to continue supplying Meralco with baseload power. What we are asking for is just a temporary and equitable relief, to allow the power facilities to survive this difficult period and continue supplying power to Meralco.”
If its rate hike plea will be accorded with a favorable ruling, SMC emphasized that “this will allow the power generation facilities to continue sourcing the necessary fuel and allow it to viably operate and supply power.”
It further stated “While this will result in temporary increase in prices, the grid would continue to have adequate supply of reliable base load power to keep the lights on for the millions of individual consumers, households and industrial facilities.”