CA denies SMC subsidiary’s TRO plea on PSA with Meralco

The 16th division of the Court of Appeals (CA) has denied the petition of San Miguel Energy Corporation (SMEC) for a temporary restraining order (SMEC) on its supply of 330-megawatt capacity to Manila Electric Company (Meralco) from the Sual coal-fired power plant.

With the appellate court’s ruling, Energy Regulatory Commission (ERC) Chairperson Monalisa C. Dimalanta opined that the San Miguel power company shall continue with the implementation of its power supply agreement (PSA), primarily on the delivery of its committed capacity to Meralco based on their fixed price contract.

The headline rate of Meralco’s PSA with SMEC that was signed in 2019 had been at P4.6314 per kilowatt hour (kWh), inclusive of value added tax (VAT) charges, while the levelized cost of electricity (LCOE) had been pegged at P4.9299 per kWh.

According to Meralco, the capacity delivered by the SMC power subsidiary in November and December supply months had been priced at P4.01 per kWh and P3.99 per kWh, respectively.

In the CA verdict, it was stipulated that SMEC’s “prayer for the issuance of a TRO and/or preliminary injunction is denied.”

When the joint application of SMEC and Meralco for a P0.30 per kWh rate hike was junked by the ERC, as announced October last year, San Miguel elevated its case to the CA through its petition for certiorari against the regulatory body; wherein it also prayed in part for the issuance of a TRO.

The ERC, in a media statement, conveyed “the CA ruled that SMEC failed to prove its right to a restraining order.”

The regulatory body expounded that based on the appellate court’s decision, “ERC’s denial of SMEC’s motion for price adjustment already preserves the status quo – which is the contract price in SMEC and Meralco’s power supply agreement.”

The CA similarly stated that “a TRO should not be issued since there is a need for an extensive determination of the merits of SMEC’s case,” adding that had the plea for injunctive relief been granted, such will “give SMEC the unrestricted power to terminate, at its own will, the power supply agreement to the detriment of public consumers.”

Conversely, the CA has granted SMEC’s motion that this subject case be consolidated with its other case relating to its PSA with Meralco – that is in reference to the fixed price power supply deal with SMC subsidiary South Premiere Power Corporation (SPPC) which requires the delivery of 670MW from its Ilijan gas-fired power facility.

To recall, the SPPC-Meralco supply contract was earlier served with a 60-day TRO which lapsed on January 25 this year – and that development compelled the utility firm to source more expensive electricity from an ‘emergency supplier’ as well as from the Wholesale Electricity Spot Market.

In a separate statement, SMC Global Power of the San Miguel group indicated that it “will continue to pursue all available legal remedies in line with our fiduciary duties to our stakeholders - to preserve our ability to provide stable power supply for consumers and forge ahead with new and existing projects aimed at helping secure our country’s future power needs.”

The company asserted confidence that “our government, through the judiciary, is one with us in promoting an environment where both consumers and industries collaborate in delivering on our country’s energy goals and providing viable and shared solutions to address the ongoing power crisis.”