ERC Rejects Rate Hike Application of Meralco and SMC

The Energy Regulatory Commission (ERC) has rejected the rate hike application of  ₱0.30 per kilowatt hour (kWh) of SMC Global Power Holdings (SMCGP) of the San Miguel group and Manila Electric Company (Meralco).

In their ruling, the ERC brought up the fixed price power supply agreement (PSA) that Meralco entered with SMCGP’s subsidiary firms or the South Premiere Power Corporation (SPC) for the Masinloc Power Partners Ltd. Co. for the Masinloc coal-fired power facility and the Ilijan gas-fired power plant.

Three of the Commissioners for ERC including the ERC Chairperson Monalisa C. Dimalanta voted in favor of rejecting the rate hike applications.

SMC was looking at an increase of ₱0.30 per kWh to be passed to the consumers over six months to recover the ₱5.2 billion worth of lost revenue that was accumulated from January to May of 2022 which was caused by the skyrocketing prices of fuel around the world. Coal increased as much as $440 million per metric ton (MT) from $60-65 per MT when contracts were then signed back in 2019.

The ERC says that “Meralco, as a regulated entity, is enjoined to ensure the preservation of the PSA under the approved terms to protect the consumers for whose benefit it has secured this supply under a fixed price arrangement for the 10-year period from the adverse effects of such termination,”

With earlier thoughts of possible termination of the SMC-Meralco contracts, the ERC reiterated “to observe not only their reciprocal obligations but more importantly, the obligation to supply electricity consumers in the least cost manner.”

Source: Manila Bulletin