CA grants SMC power arm’s plea to suspend its PSA with Meralco 


THE Fourteenth Division of the Court of Appeals (CA) issued a Temporary Restraining Order (TRO) in favor of South Premiere Power Corporation (SPPC), a subsidiary of SMC Global Power Holdings Corp. (SMCGP), suspending the implementation of its power supply agreement (PSA) with Manila Electric Company (Meralco). 

“(SMC) and SMCGP received this afternoon…a copy of the resolution dated November 23 where the 14th Division of the Court of Appeals issued Temporary Restraining Order enjoining the ERC (Energy Regulatory Commission) and Meralco from implementing the orders issued against SPPC in ERC Case no. 2019—81 following the posting of a bond by SPPC in the amount of P50 million,” SMC said in a disclosure to the stock exchange Friday afternoon.

It added that the petition for certiorari of San Miguel Energy Corp. (SMEC), another SMCGP subsidiary, is pending with the 17th Division of the CA.

The ERC, for its part, said it received a copy of the resolution last November 24. 

The CA 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 its petition for certiorari, SPPC claimed that it did not file a motion for reconsideration of the ERC’s order dated September 29, 2022, denying its rate increase petition because, among others, SPPC would suffer “grave and irreparable injury…should it be required to await ERC’s final action…”, the ERC acted with grave abuse of discretion in denying its rate increase petition, and the ERC acted with grave abuse of discretion when it interpreted the rights of SPPC and Meralco under the PSA. 

The agency said the plea for price increase was denied since 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. 

Moreover, 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,” she said.

“The fixed price PSA of Meralco with SPPC covers 670 MW (megawatts) of supply. 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 (Wholesale Electricity Spot Market) 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,” added Dimalanta.

The ERC said that the TRO, which relied solely on the statements of SPPC in its petition, cited the “simulations made by Meralco, which were independently corroborated by the ERC’s Regulatory Operations Service (ROS), (as) reasonably true and valid.” 

However, the ERC said this misinterpretation of the simulations of ROS will be clarified when it submits its comments to the CA. “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,” Dimalanta said.