Power retailer Manila Electric Co. (Meralco) said Friday the Energy Regulatory Commission’s (ERC) approval to terminate the power supply agreement
“We respectfully submit that requiring ERC approval for PSA termination, when there is clear ground under the PSA, especially if the ERC has evaluated and approved its terms, is not only an unnecessary step but gives the ERC discretion to hold hostage the parties,” Meralco first vice president and regulatory management head Jose Ronald Valles said in a letter to the ERC.
He said this position is strengthened under Article VII Section 28 of the PSA guidelines where ERC approval of a PSA already includes determination of the “PA’s reasonableness in terms of costs, risk allocation and other contractual terms.” “Should ERC release its decision on the termination several months after filing of the pleading for such purpose, parties will [continue to] suffer trying to implement the supply agreement [e.g., despite illegality of continued operations for DU that loses franchise or genco that has lacking permit such as COC] in the meantime,” he said
“As another example, gencos will be forced to [continue to] incur losses even if termination is due to its financial inability to continue the supply or DU’s inability to pay for supply delivered, and the question arises on whether gencos will be allowed to recoup their losses incurred while awaiting ERC approval of the termination,” he said.
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