SMC Global Power Holdings Corp. (SMCGP), the energy investment arm of San Miguel Corporation, contended that its step to elevate its rate hike case to the Court of Appeals (CA) is a valid legal remedy it can resort to after its petition was junked by the Energy Regulatory Commission.
“Going to the Court of Appeals is part of our right to due process among the legal remedies provided to us by the Constitution. We recognize and respect the independence of the judiciary as part of our system of check and balance,” the diversified conglomerate stressed.
SMCGP opined that “the ERC decision, which forces us to continue absorbing billions in losses in the face of a continuing war in Ukraine and escalating global fuel prices, is against its mandate,” emphasizing that “everyone — including Filipino enterprises — is entitled to a fair hearing by an independent, impartial tribunal.”
“We believe that by exercising our constitutional right under the law, we can continue discussions on how to deliver the least cost to the consumers in an objective and impartial manner,” the company added.
SMCGP, in particular, noted that the ERC denying its P0.30 per kilowatt hour (kWh) rate hike application which it proposed to be enforced within a six-month period, has been deemed "counter intuitive" to the desire of the government for lower rates that shall be passed on in the electric bills of Filipino consumers, especially if that shall be reckoned for a longer period of time.
Case in point, if the SMC-underwritten power supply agreements (PSAs) with Meralco will be terminated and the capacities will be placed under new round of bidding, it is highly expected that the new rates to be offered in the tendering process may certainly be higher compared to the fixed-priced PSAs previously sealed between the SMC subsidiary-firms and Meralco in 2019.
The PSAs covered supply procurement of 670 megawatts of capacity from the Ilijan plant, which is under South Premiere Power Corporation (SPPC); and the other is the supply deal inked with San Miguel Energy Corporation (SMEC) covering 330MW capacity to be delivered from the Sual plant.
SMC stated “it is the ERC’s responsibility to ensure the least cost of power for consumers. It should have taken this into consideration when reviewing the merits of, and deciding on the petition.”
According to the conglomerate, “the projections were reviewed and validated by no less than the ERC’s own Regulatory Operations Service. And yet, the ERC Chair and two Commissioners denied the petition, forcing us to continue to absorb losses, and essentially preventing us from exercising our legal options, clearly laid out in the PSAs, to preserve our financial standing. This, despite, two other commissioners delivering strong dissenting opinions.”
SMC argued that “in our joint petition before the ERC, Meralco already provided the Commission with in-depth computations and projections showing that granting the temporary rate hike would have been the least costly option for power consumers,” specifying that “it would also be beneficial in the long term, as it would preserve the fixed-rate PSAs.”
It similarly stipulated that “the ERC, as an independent electric power industry regulator is tasked to equitably promote and protect the interests of both consumers and its stakeholders, to help improve quality of life and deliver sustained economic growth.”
SMC further said “ERC was made aware of the looming power rate hikes. It was also made aware of how it can ensure that the public gets the lowest possible rate while energy players continue to supply power viably amid rising geopolitical risks beyond anybody’s control. Yet, it still chose to look the other way.”