Court of Appeals grants San Miguel’s request to suspend supply to Meralco
25 November 2022 /ERC-Planning and Public Information Service
CITY OF MANILA - The Fourteenth Division of the Court of Appeals issued a Temporary Restraining Order (TRO) in favor of South Premier Power Corporation (SPPC), a San Miguel subsidiary, suspending the implementation of its Power Supply Agreement (PSA) with Manila Electric Company (MERALCO). In a copy of the TRO received by the Energy Regulatory Commission (ERC) after office hours on 24 November 2022, the Court said: “…in view of the circumstances and the interest of the general public, this Court grants the TRO and hereby suspends the implementation of the PSA. The TRO shall be effective for a period of 60 days from service on Respondents.”
In the Petition for Certiorari filed by SPPC against Respondents Energy Regulatory Commission’s (ERC), MERALCO, NASECORE and Mr. Uriel Borja, SPPC claimed that: (a) it did not file a Motion for Reconsideration of the ERC’s Order dated 29 September 2022 denying its rate increase petition because, among others, SPPC would suffer “grave and irreparable injury…(in terms of millions of pesos daily) should it be required to await ERC’s final action…”, (b) the ERC acted with grave abuse of discretion in denying its rate increase petition, and (c) the ERC acted with grave abuse of discretion when it interpreted the rights of SPPC and MERALCO under the PSA. The Petition ended with a prayer that the Court of Appeals grant the rate petition “without prejudice to any further requests for price adjustments for June 2022 onwards.”
The plea for price increase was denied by ERC since the regulatory body ruled that the agreed price in the PSA is fixed in nature, and the grounds for increase cited by SPPC and MERALCO were not among the exceptions that would allow for price adjustment.
ERC Chairperson and CEO Monalisa Dimalanta, expressed grave concern on the instantaneous effect of the temporary suspension in the implementation of the PSA based on the TRO. This will consequently expose approximately 7.5 Million registered MERALCO consumers in the National Capital Region and other areas in Region III and IV to higher electricity prices without preparation usually observed in case of PSA termination. “The fixed price PSA of MERALCO with SPPC covers 670MW of supply,”
says Chair Dimalanta, “this, along with the other fixed price PSAs, have been shielding MERALCO consumers for the past several months from the volatility of prices from WESM and automatic fuel pass-through PSAs. 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.”
The TRO, relying solely on the statements of SPPC in their Petition, cited the “simulations made by MERALCO which were independently corroborated by ROS, (as) reasonably true and valid.” This misinterpretation of the simulations of ERC’s Regulatory Operations Service (ROS) will be clarified when ERC submits its comments to the Court. ERC is confident that the Fourteenth Division of the Court of Appeals, consistent with existing jurisprudence, will accord great respect, if not finality, to the regulator’s factual findings because of its special expertise over the energy sector.