Infrastructure-oriented think tank Infrawatch PH cautioned the public to brace of more expensive power rates next year due to the direct consequence of the Energy Regulatory Commission (ERC)’s rejection of the joint petition of San Miguel Global Power (SMGP) and Meralco to temporarily raise power rates by at least P0.30 per kilowatt-hour.
Mr. Terry Ridon, Infrawatch PH convenor said that the power supply agreement (PSA) suspension has consequently resulted in power distributor Meralco buying additional power supply from the Wholesale Electricity Spot Market (WESM), which prices are at least 75% more expensive than the price in the PSA.
Ridon renewed Infrawatch PH’s call on the energy commission to ensure the cheaper cost to consumers following the suspension of San Miguel’s South Premier Power Corp. (SPPC) power supply deal with Meralco.
“The commission, together with the energy department, should exhibit sectoral leadership and compel power generators to make competing price proposals no higher than the price proposal in the joint petition,” Ridon said.
Last, Meralco signaled the possibility of higher electricity rates by January 2023 as it started sourcing out last week an additional 670 megawatts (MW) from the spot market WESM.
Meraclso’s decision comes at the heels of the suspension of its 670-MW fixed price PSA with SPPC due to a temporary restraining order (TRO) issued by the Court of Appeals (CA).
The power distributor company said that the emergency PSAs that are being negotiated also have higher rates than that of the now suspended PSA contract with SPPC.
Monalisa Dimalanta, ERC chairperson and CEO confirmed last week that based on ERC computations, substituting the SPPC power supply with electricity from the WESM entirely could lead to an increase of anywhere between P60 and P80 in the monthly power bills of Meralco customers consuming 200 kWh.
The Infrawatch PH convenor said that the price proposals are higher than the proposed rate increase in the rejected petition is unacceptable.
“If the ERC entertains price proposals significantly higher than the price proposal in the rejected joint petition, it will have failed to ensure the least cost to consumers, which is one of the most fundamental principles in energy regulation,” Ridon said.
“With unabated inflation and stunted incomes, energy regulators should explain to the public how these elevated rates constitute the least cost to consumers?” he also said.
Moreover, Ridon said that energy regulators can blame no one but themselves if the public experiences bill shock in January 2023.
“This is certain: energy regulators will face a crisis as soon as the January power bills arrive at the doorsteps of ordinary households. How will they explain to struggling families that they were ultimately responsible for the price hikes?” he said.
“This is a power which the ERC could have wielded during the joint petition deliberations, if only to stop rates from spiking at the pace that we are currently seeing. They made their bed, but it is the public that will lie in it,” Ridon said.
Reportedly, the plea for price increase was denied by the energy commission 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.
Earlier, SMGP said that the ERC was made aware of the looming power rate hikes, as well how it can ensure that the public gets the lowest possible rate while energy players continue to supply power viably amid rising geopolitical risks beyond anybody’s control.
“Yet, it still chose to look the other way,” the energy company said.
Ramon Ang, the SMC president and chief executive officer also said that the company did not want to have the PSA terminated, which is why it sought for a temporary, six-month relief from the ERC.
“From the very start, we were very transparent and clear with the ERC: we were not asking for a permanent increase, we did not want to be relieved of our contractual commitments, we were just asking for temporary, equitable relief, given the undeniable and unforeseen circumstances that affect not just us, but all Filipinos and many economies worldwide,” Ang said.
A joint rate hike petition of SMC power units and Meralco for a temporary adjustment in the prices of their PSAs signed in 2019 to recover fuel costs amid the unprecedented spike in fuel prices was earlier denied by the ERC in an order promulgated last Sept. 29.
SMGP appealed the decision with the Court of Appeals, in which subsidiary SPPC was able to secure a favorable ruling from the CA 14th Division in its petition filed against the ERC’s decision.
The CA issued a temporary restraining order effective for 60 days in favor of SPPC, suspending the implementation of its PSA with Meralco.