SMCGP asks ERC to approve P0.30/kWh rate hike amid losses

SMC Global Power Holdings Corporation (SMCGP), the power arm of San Miguel Corporation, appealed to the Energy Regulatory Commission (ERC) to approve its proposed power rate hike for the energy it will supply to the Manila Electric Co. (MERALCO) in the next six months.

According to Mark Salazar’s report on “24 Oras”, SMGCP is asking the ERC to approve its proposal to impose an additional P0.30 per kilowatt hour for the 1000 MW its two plants supply to Meralco.

SMGCP said that its losses already amounted to around P5 billion.

If its request was denied, SMGCP said it would have to terminate its power supply agreements (PSA) with Meralco by October 4, 2022.

“The temporary relief, if granted, would increase electricity prices in Luzon by only P0.30/kWh over a period of six months,” it said in a statement.

“However, without it and with the termination of the PSA (power supply agreements), Meralco has estimated an increase of at least P0.80 up to P1.30/kWh in the price of electricity over the next 3-4 months, as it will have to find alternative sources that will most likely be costlier, including the Wholesale Electricity Spot Market,” it added.

Meanwhile, Meralco First Vice President and Head of Regulatory Affairs Jose Ronald Valles said during the ERC hearing on the issue that if no acceptable resolution was reached to restore the commercial position then they would be constrained to terminate the contract after 60 days.

"And finally, last August 5 they (SMGCP) already sent notices of termination for both contracts which should be effective Oct. 4, 2022, in accordance with the PSA,” added Valles.

Valles also explained that the Indonesian ban on exporting coal and the ongoing Ukraine-Russia conflict were affecting global fuel prices, which in turn, caused losses to companies providing them with power.

“The legal basis cited by SMGCP is Section 11.3 of the PSA which allows parties to apply for a relief in a form of price adjustment in case of a change in circumstance,” he added.

SMGCP, for its part, acknowledged that any price increase would be “unpopular” but explained that coal prices were now at $400/metric ton compared to the previous rate of $65/MT.

“We just hope the ERC will not merely try to prevent a temporary increase but will take a whole-of-industry approach. No company or business can sustain operations with this unprecedented and continuing rise in costs,” it added.

Meanwhile, the consumers’ group “Power for People,” said it does not believe SMGCP is suffering from financial losses for it to ask for a power rate hike.

“Isang kompanya ang pumasok sa isang kontrata at in-allow na magprovide ng kuryente pero nung nagkamali ang kaniyang projection at hindi umano ay nalulugi ay hihingi na ng pagbabago ng kontrata,” it said.

(A company entered a contract that would allow them to provide power but their projections were wrong and now, they are allegedly suffering losses that’s why they are asking for changes in the contract.)

GMA News sought comment from ERC on the matter but the Commission has yet to respond as of posting time. — Sundy Mae Locus/DVM, GMA News