The Energy Regulatory Commission (ERC) has granted permission to Manila Electric Co. (Meralco) and Panay Energy Development Corp. (PEDC) to recover nearly P900 million in losses from consumers, despite the termination of their power supply agreement (PSA). However, there will be no immediate impact on rates as the ERC still needs to review Meralco’s recovery petition.
In a decision released on Aug. 29, the ERC approved Meralco and PEDC’s joint motion for a contract price adjustment due to high fuel costs, which was considered a valid change in circumstance under their PSA. As a result, PEDC incurred losses amounting to P884.55 million as of September last year.
The ERC has also approved the termination of the PSA, citing PEDC’s inability to meet its contractual obligations due to the losses incurred. Under the 2021 PSA, PEDC provided 70 megawatts of capacity from its coal-fired power plants at a price of P2.3309 per kilowatt-hour (kWh) from April to December 2022. The companies filed a joint urgent motion for a contract price adjustment on April 13 last year, stating that actual fuel costs were more than double the assumed price based on the global average.
The ERC will calculate the price adjustment accordingly.
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