San Miguel, Meralco win Supreme Court battle vs. regulator on 2023 power deal termination

After over a year’s worth of legal battles with regulators, San Miguel Corp. and Meralco have emerged victorious against the Energy Regulatory Commission (ERC).

Lawyers of both firms have received the resolution of the Supreme Court’s First Division — dated April 3, 2024, but received only earlier this week — junking the bid of the ERC to overturn a ruling by the Court of Appeals.

That June 2023 ruling sided with San Miguel and Meralco in nullifying the power regulator’s decision to prevent both firms from terminating two fixed-price power supply agreements (PSA) between generating units of San Miguel Global Power and the electricity retailer.

“Considering the allegations, issues, and arguments adduced in the petition for review… the Court resolved to deny the petition for failure of petitioner (the ERC) to sufficiently show that the Court of Appeals committed any reversible error in the challenged joint decision and resolution as to warrant the exercise of this Court's discretionary appellate jurisdiction,” the resolution said.

San Miguel had earlier argued that unforeseen circumstances, especially the spike in fuel costs caused by Russia’s invasion of Ukraine, was part of the “change in circumstances” that merited an amendment of the original contract to allow it to recover some of its losses.

This was opposed by the ERC which wanted to hold San Miguel to its money-losing contract.

But Meralco supported San Miguel’s assertion, arguing that this route was the least cost option to electricity consumers. Meralco argued that denying San Miguel’s rate adjustment request would result in the conglomerate walking away from the original deal which would, in turn, force Meralco to source electricity from the more expensive spot market. 

San Miguel Corporation's head office in Mandaluyong City.
About the author
Daxim L. Lucas
Daxim L. Lucas

Senior Reporter

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