TRO on South Premier-Meralco deal worries Marcos

MANILA, Philippines — President Marcos expressed hope yesterday that the Court of Appeals (CA) would reconsider its decision to suspend the power supply deal of San Miguel Corp. subsidiary South Premier Power Corp. (SPPC) with Manila Electric Co. (Meralco) and deliberate on what he described as its “extremely deleterious effect” on power prices.

Last Nov. 24, the CA’s 14th Division issued a temporary restraining order (TRO) suspending the implementation of SPPC’s power supply agreement with Meralco.

The court ruled in favor of the SPPC in a petition filed against the Energy Regulation Commission (ERC)’s decision to deny its joint motion with Meralco for a price increase. The power firms had cited global increases in fuel and coal prices in seeking the rate adjustment.

But in a decision released last September, the ERC said the agreed price in the power supply agreement is fixed and the grounds for increase cited by SPPC and Meralco were not among the exceptions that would allow for price adjustment.

The SPCC argued that the ERC had acted with grave abuse of discretion in denying its rate hike petition and when it interpreted its rights and those of Meralco under the supply deal.

The appellate court issued the TRO, noting that the SPPC had claimed that unless the implementation of the ERC order is immediately restrained, it would be forced to continue supplying energy to Meralco under the power supply agreement at a loss.

“The implementation of the PSA (power supply agreement) between Meralco and San Miguel, it is unfortunate that this has happened, it will cause further dislocations and possible price increase for power,” a Palace statement quoted Marcos as saying.

“We hope that the CA will reconsider. And include in their deliberations the extremely deleterious effect this will have on power prices for ordinary Filipinos,” the President added.

The TRO shall be effective for a period of 60 days from service to respondents.

ERC Chairperson Monalisa Dimalanta has expressed concern over the effect of the suspension, claiming it would expose about 7.5 million registered Meralco consumers to higher electricity prices without preparation usually observed in case of supply agreement termination.

She said the fixed price power supply agreement of Meralco with SPPC covers 670 megawatts of supply.
This, along with other fixed price supply deals, has shielded Meralco customers for the past several months from the volatility of prices from the Wholesale Electricity Spot Market (WESM) and automatic fuel pass-through power supply agreements, she said.

“If these PSAs are immediately suspended, this brings us precisely to the situation which we at the ERC have sought to avoid with our ruling that required the proper observance of the terms of the PSA, including the contractually-agreed process of termination,” Dimalanta said in a recent statement.

Jose Ronald Valles, Meralco first vice president and head of regulatory management, has said the company is reviewing the court’s resolution.

Valles said Meralco has written the DOE to follow up on its previous letter requesting for competitive selection process exemption of certain emergency power supply agreements that are ready to be implemented to shield its customers against volatile and potentially higher WESM prices.