Power utility giant Manila Electric Company (Meralco) has formally asked South Premiere Power Corporation (SPPC) to pay the "price difference" it incurs after the San Miguel Corp. unit stopped supplying capacity from its Ilijan plant.

In a letter on Monday, Dec. 12, 2022 addressed to SPCC General Manager Ellen Go, Meralco demanded SPPC to pay the price difference between the" contract price and the WESM price" to which Meralco would be exposed during the effectivity of the temporary restraining order (TRO).

The San Miguel-owned power company indicated that its move was anchored on the 60-day TRO issued by the Court of Appeals (CA) on its rate hike case that was earlier junked by the Energy Regulatory Commission.

The power utility added that the "cost difference"’ being claimed “will be on top of all applicable fines, penalties, and liquidated damages under the PSA in the event that the Court of Appeals eventually resolves the main case and denies the petition of SPPC.”

The total amount of the Meralco claims against the Ilijan plant will be reckoned on the final charges to be billed by the Wholesale Electricity Spot Market (WESM).

It could be recalled that the Ilijan capacity under contract to Meralco is at 670 megawatts, but the SMC firm issued notice of cessation of supply to the utility firm on December 7 this year.

The power utility giant underscored that because of stoppage of supply from SPPC, Meralco has been sourcing 670MW of the Ilijan contracted capacity from the spot market.

And since the power sourced from the WESM had been generally more expensive, the "cost difference" has to be demanded from SPPC based on the terms of their power supply deal.

On its mandate to serve its customers on a "least cost manner", Meralco emphasized that it has been “exhausting all efforts to protect its customers from potentially higher generation costs, while ensuring continuity of stable, reliable, and least cost power under the current circumstances.”

Meralco previously stated that its capacity purchases from the WESM were being priced at P7.00 to P9.00 per kilowatt hour (kWh), which is twice higher than its contract price with SPPC for the Ilijan plant.

The power distribution firm, nevertheless, pointed out that the final settlement prices at the WESM may still taper off in the forthcoming trading days because of cooler temperatures, and most of the plants which were on forced outages in recent days, have already been getting back to commercial operations.