MANILA - San Miguel Corp on Monday said its power unit SMC Global Power Holdings Corp is seeking hikes in contracted power rates to recover part of its fuel costs after incurring huge losses from high coal prices.
In a statement, SMC said the SMCGP's Sual Coal and Ilijan Natural Gas power facilities have already incurred combined losses of P15 billion since 2021.
The company said it has sought for a temporary and partial cost recovery relief for its losses incurred from January to May 2022 in the form of rate increase on its contract capacity to be amortized within 6 months.
The relief will allow the facilities to continue sourcing the necessary fuel and allow it to operate and supply power, SMCGP said.
The company said it is asking the Energy Regulatory Commission for a rate increase from January to May 2022 of P0.90 per kwh to P5.1/kwh from P4.3 for its 670 MW of contracted baseload capacity from the Ilijan Plant and an average of P4.0/kwh (from P4.3 to 8.3/kwh) for the 330 MW contracted baseload capacity from the Sual Plant.
SMCGP said it is looking to recover P5.2 billion in losses for the period January to May 2022. The net rate impact if the ERC will approve the claim is just P0.28/kwh for a period of 6 months, it added.
"While this will result in temporary increase in prices, the Grid would continue to have adequate supply of reliable base load power to keep the lights on for the millions of individual consumers, households and industrial facilities," it said.
Coal prices breached the $400 per metric ton level, beyond the $60 to $65/MT price range and the outlook used at the time of the execution of its power supply agreements (PSA) with Meralco in 2019, the company said.
SMC president Ramon Ang said the company decided to absorb some P10 billion in losses last year, which it did not file a claim for after coal prices hit $176/MT from $99/MT in the first half of 2021.
Coal prices averaged just $69/MT in 2019 and 2020. Ang said prices have increased by over 500 percent largely due to the Russia-Ukraine war, and the impact of the COVID-19 pandemic on supply chains.
The unilateral notice of gas restrictions has also affected the generation capacity of the Ilijan natural gas plant forcing it to source costly replacement fuel from the Wholesale Electric Spot Market (WESM), it added.
“We are not asking to recover all our losses, neither are we asking for a permanent increase. We want to continue supplying Meralco with baseload power. What we are asking for is just a temporary and equitable relief, to allow the power facilities to survive this difficult period and continue supplying power to Meralco,” Ang said.
Ang said the company remains focused on maximizing existing power assets in our portfolio to continue providing for the needs of the country, including boosting its renewable capacities and new battery energy storage system facilities.
"More importantly, the continuing energy crisis we face has made us even more committed to finding sustainable solutions that will significantly reduce our dependence on traditional sources while satisfying the growing demands of our economy towards a clean energy future," Ang said.