CA: Suspension of SMC-Meralco power supply deal stays

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Metro Manila (CNN Philippines, January 31) — The power supply agreement (PSA) between Manila Electric Company (Meralco) and South Premiere Power Corporation's (SPPC) will remain suspended, the Court of Appeals (CA) has ruled.

In a resolution promulgated on Jan. 25, the CA granted the petition for a writ of preliminary injunction of SPPC, a subsidiary of San Miguel Global Power under San Miguel Corporation. This will keep the suspension of the company's deal to supply 670 megawatts from its Ilijan gas-fired power plant to Meralco in place.

But the court said the injunction does not terminate the PSA.

"The purpose of injunction is to prevent threatened or continuous irremediable injury to the parties before their claims can be thoroughly studied and adjudicated," the CA explained. "Its sole aim is to preserve the status quo until the merits of the case are fully heard."

The court added there is an "urgent and paramount" need for the injunction in order to prevent serious damage to SPPC, "which is forced to continue to supply energy to Meralco for the benefit of the public without even being able to recoup the cost of such energy."

SPPC earlier asked the CA to terminate its agreement with Meralco after the Energy Regulatory Commission (ERC) rejected its request to temporarily hike electricity prices due to financial losses caused by rising fuel prices and inflationary pressures.

However, the ERC argued that prices are fixed in the PSA to protect consumers from volatility, and there were no grounds to justify the adjustments.

The CA in November effectively rejected the ERC's position when it issued a temporary restraining order, which has already lapsed after 60 days. 

In granting the injunction, the CA directed the parties to enter into "good faith negotiations." The court also ordered SPPC to post a bond of ₱100 million as compensation for the damages the respondents in the case may suffer or sustain as a result of its decision.