THE Power for People Coalition (P4P) and several other groups on Monday filed a motion for intervention before the Court of Appeals (CA) Thirteenth Division seeking to lift the writ of preliminary injunction (WPI) it issued last month which indefinitely suspended the implementation of the power supply agreement between South Premiere Power Corp. (SPPC), a unit of SMC Global Power Holdings, Corp. (SMCGP) of conglomerate San Miguel Corp., and the Manila Electric Company (Meralco).
The injunction was sought after the Energy Regulatory Commission (ERC) junked the joint petitions for rate hike of SPPC and San Miguel Energy Corporation (SMEC) and Meralco for price adjustments to serve as temporary relief covering a combined P5.2 billion in losses incurred from January to May 2022 due to the unprecedented spike in fuel prices.
Aside from the P4P, the other intervenors are the Bukluran ng Manggagawang Pilipino (BMP), Sanlakas, and Freedom From Debt Coalition.
The groups sought to intervene on the issue, being part of the 7.5 million consumers of Meralco.
The intervenors sought the dismissal of the petition filed by SPPC and SMEC, insisting that the ERC did not commit grave abuse of discretion when it denied their joint petitions for rate hike.
It added that the petitioners failed to prove financial losses that would warrant the grant of their petition for a power rate hike.
“We must remember that this issue arose because SMC, after competing for the fixed-price contract, decided that it will no longer honor it when it no longer suited them. SMC never asked to change prices when the pandemic hit and fossil fuel prices went down to an all-time low. SMC kept the profits and it was the consumers who had to suffer without any voice and participation at any point in this fiasco. That is not just unfair, it is unjust,” P4P Convenor Gerry Arances said.
Luke Espiritu, President of BMP and legal counsel of P4P, said the case pending before the CA will have serious repercussions which would require all stakeholders to be heard to ensure the fairest decision possible.
“Fixed price PSAs were conceived as a way to comply with the spirit of EPIRA (Electric Power Industry Reform Act), which is to provide electricity at the lowest possible cost to consumers. If SMC succeeds in convincing the court that it can change prices at will, it effectively negates any fixed-price contract to the detriment of consumers,” Espiritu said.
“Fixed-price contract recognizes that corporations have the expertise and means to hedge changes in fossil fuel prices in the market and should therefore bear the burden of absorbing such changes instead of consumers, who do not have any choice but to pay what is asked of them,” he added.
In a resolution issued last month, the CA’s Thirteenth Division directed the parties to enter “into good faith” negotiations as mandated under the provisions of the PSA.
“To be clear, the grant of WPI suspends the continued implementation of the PSA but does not terminate the same. This is to allow the parties to negotiate the terms of the PSA.
The parties re directed to enter into good faith negotiations as stated in paragraph 11.4 [d] of the PSA,” the appellate court stressed.
The appellate court said the provisions of the PSA mandates SPPC and Meralco to come up with a satisfactory solution regarding the amendment of their PSA to SPPC’s commercial position prior to such change in circumstances, including an adjustment of the contract price.
If they fail to reach an agreement within 60 days from the commencement of the negotiations, SPPC shall be entitled to terminate the PSA.
According to the ERC, the plea for price increase was denied because 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.