CA upholds ruling favoring San Miguel units

By Ashley Erika O. Jose, Reporter

THE Court of Appeals (CA) has upheld its decision to consolidate the cases filed by units of San Miguel Global Power Holdings Corp. one of which earlier secured an indefinite suspension of a power supply deal priced way lower than prevailing electricity prices.

It denied a motion for reconsideration filed by the Energy Regulatory Commission (ERC), which wanted the cases to be tried separately because a decision in one case is likely to affect the other.

“The Court does not find merit in respondents’ supposition. Although the petitioners are different in the cases before Us, and conflicting resolutions have already been issued by the different divisions of the Court, it cannot be denied that the legal issues are so closely related to warrant the consolidation of the petitions,” the appellate court said in a resolution promulgated on April 3.

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said in a Viber message to BusinessWorld that for now, the ERC will defer to the Office of the Solicitor General (OSG) for its next move.

“What we filed is already a motion for reconsideration, we are waiting for OSG’s advice,” Ms. Dimalanta said on Tuesday.

To recall, the ERC appealed the decision of the appellate court to consolidate the cases filed by San Miguel Energy Corp. (SMEC) with that of South Premiere Power Corp. (SPPC) on their separate power supply agreements (PSA) forged in 2019 with Manila Electric Co. (Meralco).

Meanwhile, the CA also upheld its decision granting a writ of preliminary injunction (WPI) in favor of SPPC, denying the motion for reconsideration both filed by Meralco and the ERC.

“After a re-examination of the records, this Court finds that the arguments and issues raised by the respondents in their motions for reconsideration are the same arguments and issues that have already been considered in the Resolution dated January 25, 2023 being sought to be reconsidered. Considering that no new matters had been raised by the movants, there is no cogent reason to disturb this Court’s resolution,” the CA said.

ERC filed a motion for reconsideration arguing that the issuance of a WPI prejudged the disposition of the main petition and that only the Supreme Court (SC) has the power to issue injunctive relief against the implementation of Republic Act No. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001.

In its January decision, the CA granted the WPI sought by SPPC on its PSA with Meralco, thereby suspending its PSA with the power distributor.

SPPC is the administrator of the gas-fired power plant in Ilijan, Batangas while SMEC is the administrator of the coal power plant in Sual, Pangasinan. The two sought a rate increase from the ERC last year, with San Miguel Global Power saying that both incurred a combined loss of P15 billion. The rate increase was meant to recover part or P5 billion of their losses.

The company cited a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the contracts with Meralco. However, the ERC denied the petition, saying this had no basis as the PSA is a fixed-rate contract.

Meanwhile, the ERC has directed Meralco and San Miguel Global Power to not terminate their PSAs under two other power generation companies.

“The applicants are reminded to refrain from taking any action implementing any termination until the Commission has acted on any appropriate pleading that may be filed by the applicants seeking specific reliefs relative to the notice of termination,” the ERC said in its order.

In March, Meralco announced that the two subsidiaries of San Miguel Global Power — Excellent Energy Resources, Inc. (EERI) and Masinloc Power Partners Co. Ltd. (MPPCL) — had terminated their PSAs with Meralco.

EERI proposed to supply capacity from its natural gas-fired power plant starting in 2024 for P4.1462 per kilowatt-hour (kWh), while MPPCL offered 600 megawatts from its coal-fired power plant for P4.2605 per kWh by 2025.

San Miguel Global Power terminated the deal as the PSA application went past the date during which it should have been approved by the ERC.

“Considering that the PSA is a contract imbued with public interest, the Applicants are reminded that any termination thereof cannot take effect without prior approval of the Commission,” the ERC said.