Meralco issues notice of claim to SPPC

MANILA, Philippines — The Manila Electric Co. (Meralco) has issued a notice of claim to San Miguel Global Power’s South Premiere Power Corp. (SPPC) to cover the additional costs it has been incurring as a result of the 60-day temporary restraining order (TRO) on their power supply deal.

In a letter to SPPC yesterday, Meralco asked the company to pay the price difference between the contract price and the spot market price, to which Meralco will be exposed during the effectivity of the TRO.

The claims will be on top of all applicable fines, penalties, and liquidated damages under the power supply agreement (PSA) in the event that the CA eventually resolves the main case and denies SPPC’s petition.

“In view of this, Meralco hereby gives notice of its continuing claim against SPPC for the price difference between the WESM price and contract price under the PSA, to which Meralco will be exposed during the effectivity of the TRO or writ of injunction if any is issued, in addition to all applicable fines, penalties and liquidated damages under the PSA in the event that the Court of Appeals eventually resolves the main case denying the Petition for Certiorari and/or claim of SPPC,” the power distributor said in a letter.

SPPC officially ceased supplying Meralco under its 670-megawatt (MW) PSA last Dec. 7.

Since then, Meralco has been sourcing the 670-MW contract capacity from the Wholesale Electricity Spot Market (WESM).

The cessation of supply was a result of the CA issuance of a TRO effective for 60 days in favor of SPPC, suspending the implementation of its PSA with Meralco.

Meralco said it has been exhausting all efforts to protect its customers from potentially higher generation costs due to its increased exposure to volatile WESM prices, while ensuring continuity of stable, reliable, and least cost power under the current circumstances.

The company is in negotiations with generation companies for emergency power supply agreements or EPSAs in order to shield its customers against potentially higher WESM prices.

Meralco vice president and head of utility economics department Lawrence Fernandez last Friday said the company is rushing negotiations in order to have the EPSAs ready this week, if possible.

ERC chairperson and CEO Monalisa Dimalanta earlier said that based on ERC computations, replacing the SPPC power supply with electricity sourced from the WESM entirely could lead to an increase of anywhere between P60 and P80 in the monthly power bills of Meralco customers consuming 200 kilowatt hours.

Fernandez, however, said that since the suspension happened in the middle of the month and it is not the full supply month that is affected, the increase would not be that much for the January bills of Meralco customers.

A joint rate hike petition of SMC power units and Meralco for a temporary adjustment in the prices of their PSAs signed in 2019 to recover fuel costs amid the unprecedented spike in fuel prices was earlier denied by the ERC in an order promulgated last Sept. 29.

SMGP has appealed the decision with the CA, in which subsidiary SPPC was able to secure a favorable ruling from the CA 14th Division in its petition filed against the ERC’s decision.