By Ashley Erika O. Jose, Reporter
SAN MIGUEL Global Power Holdings Corp. has terminated its power supply agreements with Manila Electric Co. (Meralco), the electricity distributor said, as it was forced to procure supply from other generators.
“We reported earlier that the 330 megawatts (MW) that is being supplied by Sual power plant was already terminated effective midnight of July 24, that was after they sent a notice of termination last July 17,” Jose Ronald V. Valles, Meralco’s first vice-president and head of its regulatory management, said in a virtual briefing on Monday.
This came after a resolution issued by the 13th Division of the Court of Appeals (CA) favored San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC).
SPPC is the administrator of the natural gas-fired power plant in Ilijan, Batangas while SMEC is the administrator of the coal power plant in Sual, Pangasinan. The two are subsidiaries of San Miguel Global Power, the power arm of San Miguel Corp.
Mr. Valles said that immediately after receiving the notice of termination, the electricity distributor sought replacement capacity from power generators.
“We immediately looked for a replacement capacity from different power suppliers and we’ve written several power suppliers, most of them or all of them declined. Only one responded — that is San Miguel,” Mr. Valles said.
He said SMC, through SPPC, is offering the output of its Ilijan gas plant, which has resumed operations with the entry of liquefied natural gas (LNG).
“San Miguel made an offer. It’s the one on the table, that is Ilijan for the 330 MW. If we are able to sign that and are able to get approval from the ERC (Energy Regulatory Commission) then we can implement that immediately,” Mr. Valles said.
If the ERC approves the emergency power supply agreement (EPSA), its term will be until March 25, 2024, Mr. Valles said.
Under the contract, SPPC can source either from coal or gas and then eventually shift to LNG, Mr. Valles said, adding that the power utility giant has yet to calculate the rate impact on consumers considering the costlier LNG.
“We have not received any advice from Meralco or SMEC on the termination of their PSAs. Note that ERC, through OSG (Office of the Solicitor General), also filed a motion for reconsideration of the CA decision within 15 days from receipt, so the decision has not yet become final and executory,” Ms. Dimalanta said in a Viber message on Tuesday.
The CA ruling issued in June was the latest development in the case involving both units of San Miguel Global Power — SPPC and SMEC — and Meralco.
In 2022, the parties jointly filed a rate hike petition with the ERC. However, the commission denied the petition, saying this had no basis as the PSA is a fixed-rate contract.
San Miguel Global Power’s rate hike petition stemmed from losses incurred by its units SPPC and SMEC at a combined P15 billion. The rate increase was meant to recover part or P5 billion of the units’ losses.
Meanwhile, Mr. Valles said Meralco is awaiting the go-signal from the ERC before conducting a competitive selection process (CSP) for the 1,800 MW of capacity it lost from other units of SMC.
In March, Meralco announced that two subsidiaries of San Miguel Global Power — Excellent Energy Resources, Inc. (EERI) and Masinloc Power Partners Co. Ltd. (MPPCL) — had terminated their PSA with Meralco.
The contracts were terminated after their PSA application went past the date during which it should have been approved by the ERC.
“For the 1,800 MW that was being supplied by Excellent Energy for 1,200 and 600 by Masinloc, both of those contracts have been terminated by San Miguel both on the lapse of [the] six-month period under the PSA. They sent us a notice of termination,” Mr. Valles said.
He said Meralco is awaiting the ERC’s action on the termination of the contracts as the regulator needs to approve the termination.
“The ERC has advised us to await their approval of the termination,” Mr. Valles said, adding that “the moment we receive that approval from the ERC then we will proceed with the CSP for the 1,800 MW, the ToR (terms of reference) is ready for publication.”
Ms. Dimalanta said the ERC is scheduled to deliberate the contract’s termination within this month.
Emmanuel V. Rubio, president and chief executive officer of Aboitiz Power Corp. said the company is considering participating in Meralco’s CSP as long as the terms and references are favorable and within its capabilities.
“AboitizPower is open to participating in a competitive selection process — should Meralco commence one — for as long as the terms of reference are reasonable, or within the capabilities of our resources and risk limits. That said, the company will continuously seek opportunities to contribute to the delivery of much-needed energy supply in the most cost-efficient and sustainable manner,” Mr. Rubio said in a Viber message.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
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