SAN MIGUEL CORP. (SMC) said on Thursday that it will sell its power plants’ output to the wholesale electricity spot market (WESM) and will enter into bilateral contracts with off-takers after it failed to secure the energy regulator’s nod on its rate hike petition.
In a stock market disclosure, SMC assured that it will continue supplying power to Manila Electric Co. (Meralco) within the 60-day period after the receipt of the Energy Regulatory Commission (ERC) decision.
According to ERC, SMC is legally bound to continue supplying power to Meralco as stated in their power supply agreements (PSAs), which set 60 days before it can terminate the supply deal.
However, SMC said that once the termination of the PSAs takes effect, its units South Premiere Power Corp. and San Miguel Energy Corp. — the administrators of the Ilijan and Sual power plants — will have to sell their generated power to WESM “and enter into bilateral contracts with other off-takers.”
On Wednesday, SMC said it would explore all legal remedies following the decision of the ERC.
On Monday, the ERC released its order denying a joint petition from Meralco and SMC’s units, saying the rate increase sought by them was based on a valid “change in circumstance.”
SMC previously said it had incurred losses of about P15 billion, prompting the petition for the power rate increase as surging fuel costs breached the price range contemplated during the execution of the PSAs with Meralco.
The ERC denied the petition, saying both SMC and Meralco had not exhausted available options before filing the petition.
“[SMC Global Power Corp.] and its subsidiaries will remain compliant with its financial covenants under all existing loan agreements and other debt instruments,” SMC said, referring to its power arm. — Ashley Erika O. Jose