Manila Electric Co. (Meralco) has issued a notice of claim against San Miguel Corp.’s South Premiere Power Corp. (SPPC) to cover the additional costs it has been incurring in relation to a 60-day stay order on their Ilijan power supply agreement (PSA).
In a letter addressed to SPPC General Manager Elenita D. Go, Meralco FVP and Head of Regulatory Management Office Jose Ronald V. Valles said the company had to source 670 megawatts (MW) of energy from the Wholesale Electricity Spot Market (WESM).
Hence, Meralco has to pay more than its contracted price under its PSA with SPPC. Meralco has to source its energy from the WESM due to the two-month temporary restraining order (TRO) on the Meralco-SPPC PSA that the Court of Appeals (CA) issued in favor of SPPC.
To recall, the Fourteenth Division of the CA ordered the suspension of the implementation of SPPC’s PSA with Meralco, given that it would suffer “grave and irreparable injury” from the difference between fuel costs and current power rates.
Earlier, SPPC sought for a price increase from the Energy Regulatory Commission (ERC). However, the regulator denied the petition as 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.
With this, SPPC sent a formal notice to Meralco, stating that it will “cease the supply of…the contract capacity and associated energy pursuant to the PSA” starting December 7 up to the entire duration of the effectivity of the TRO.
“In view of this, Meralco hereby gives notice of its continuing claim against SPPC for the price difference between the WESM price and Contract Price under the PSA, to which Meralco would be exposed during the effectivity of the TRO or Writ of Injunction if any is issued, in addition to all applicable fines, penalties and liquidated damages under the PSA in the event that the Court of Appeals eventually resolves the main case denying the Petition for Certiorari and/or claim of SPPC,” Valles said in the letter.
The claims will be on top of all applicable fines, penalties, and liquidated damages under the PSA in the event that the Court of Appeals eventually resolves the main case and denies the petition of SPPC.
Earlier, ERC Chairperson and CEO Monalisa Dimalanta said the TRO will “will consequently expose approximately 7.5 million registered Meralco consumers in the National Capital Region and other areas in Region 3 and 4 to higher electricity prices without preparation usually observed in case of PSA termination.”
Fixed PSAs, she has said, have long been used to “shield” consumers from the volatility of prices from WESM and automatic fuel pass-through PSAs.