The SMC Global Power Holdings Corporation (SMCGP), a subsidiary of San Miguel Corporation, has formally notified Manila Electric Company (Meralco) that it will be terminating its fixed-price power supply agreement (PSA) covering 670 megawatts of supply drawn from the Ilijan gas-fired power plant.
The announcement comes after the Energy Regulatory Commission (ERC) rejected the joint petition of SMC and Meralco for relief in the form of a temporary increase in power rates.
"From the very start, we were very transparent and clear with the ERC: We were not asking for a permanent increase, we did not want to be relieved of our contractual commitments, we were just asking for temporary, equitable relief, given the undeniable and unforeseen circumstances that affect not just us, but all Filipinos and many economies worldwide,” SMC president Ramon Ang said in a statement.
"Unfortunately, despite being shown that granting our petition would have been the cheapest option for consumers, the ERC still denied our petition, fully aware that this would force us to either continue absorbing significant losses–which no company can sustain–or terminate the PSAs, which would ultimately lead to higher electricity costs for consumers: much, much higher than what we were asking for," Ang added.
On ceasing its delivery of Ilijan capacity to Meralco, San Miguel underscored that “there will be no impact on the current level of system supply because the company will still continue to offer its available and uncontracted capacity to qualified off-takers and to the spot market.”
San Miguel further conveyed that the Ilijan plant is undergoing repair works “to improve its fuel efficiency and generation ramp rate” and its resumption of operations is targeted by April next year when liquefied natural gas (LNG) is already available in the country.
Signed in 2019, the supply deal covers 670 megawatts of electricity coming from the 1,200-MW Ilijan power plant which is operated by SMGCP subsidiary South Premiere Power Corp.
