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Ensure electricity supply after ERC’s rejection of rate hike petition

Senator Win Gatchalian urged the Manila Electric Company (Meralco) to ensure a continuous supply of energy for its customers following a recent decision of the Energy Regulatory Commission (ERC) denying a petition for a rate increase made by the power distribution giant and the power-generation arm of San Miguel Corporation (SMC).


VALENZUELA CITY, Philippines – Electric meters for Meralco customers at Disiplina Village housing project, 28 Nov 2018. Photo by Mark Cayabyab/OS WIN GATCHALIAN

“As the contracting party of the power supply agreement, Meralco should assure customers of continuous supply of electricity and rates in accordance with their contract with SMC,” Gatchalian said, adding that the decision was a good precedent to ensure industry players abide by their contracts.

“I commend ERC for upholding the rule of law. This long-awaited decision sets a good precedent that industry players should bear the consequences of their business decisions, particularly in cases that affect the welfare of consumers,” Gatchalian said.

The ERC’s decision stemmed from a decision in 2019 by SMC’s electricity arm SMC Global Power Holdings Corporation (SMGCP) and its subsidiaries to enter into two fixed-price agreements to supply energy to Meralco consumers—one with its Sual coal-fired power plant in Pangasinan and the other with Ilijan natural gas plant in Batangas.

At the time the deal was made, coal prices were around $65 per metric ton (MT) which have since risen to over $400/MT.  Also, thinning supply from the Malampaya natural gas field resulted in the draining of Ilijan. As a result, San Miguel had to buy power from the spot market.

“We recognize that ERC’s job is a very delicate act of balancing the interests of consumers and industry players. Given the many difficulties that consumers continue to experience amid higher inflation rates and continuing depreciation of the peso, we commend the ERC for its decision as it will hopefully provide some relief for consumers,” the lawmaker said.