ERC opposes consolidation of cases on power supply deals

THE Energy Regulatory Commission (ERC) is appealing the decision of the appellate court to consolidate the cases filed by units of SMC Global Power Holdings Corp.

“The OSG (Office of the Solicitor General) as our counsel filed a partial motion for reconsideration on the consolidation, so in a way, we are opposing the consolidation,” ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta told reporters on the sidelines of an energy forum on Wednesday.

Ms. Dimalanta was referring to the decision of the Court of Appeals (CA) to consolidate the case of San Miguel Energy Corp. (SMEC) with that of South Premiere Power Corp. (SPPC). Both are units of SMC Global Power.

“There are many requirements for consolidation but the OSG argued that the two cases are different, the legal issue of the two cases, so it’s not prime for consolidation,” Ms. Dimalanta said.

Ms. Dimalanta said that while both cases cited a “change in circumstance,” SPPC specifically cited the change in law due to the gas restriction notice on Malampaya, while SMEC cited economic conditions due to the supply chain disruption of the Russian-Ukraine war.

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.

In January, the 13th Division of the CA issued a writ of preliminary injunction (WPI), which indefinitely suspended the power supply agreement (PSA) of SPPC and Manila Electric Co. (Meralco).

However, the CA denied the issuance of a hold order sought by SMEC but granted its motion to consolidate the case with SPPC, which is currently pending before the 13th Division of the appellate court.

“The OSG is still studying the legal implications of the decision. As of now, we’re tied with the injunction. We need to respect that,” Ms. Dimalanta said, adding that the commission will just wait for what its counsel with say.

The decision of the ERC to oppose the CA ruling stemmed from SMC Global Power’s decision to ask the CA to reverse the decision of the ERC in September last year.

To recall, SMC Global Power and Meralco jointly filed a petition for a rate increase in May last year, which the ERC denied in September.

The ERC decision prompted SMC Global Power to elevate the cases to the appellate court in November last year.

In August last year, SMC Global Power said its units SPPC and SMEC had incurred a combined loss of P15 billion. The rate increase was meant to recover part or P5 billion of the units’ 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. — Ashley Erika O. Jose