How the Philippine gov't is trying to keep power costs down amid oil price hikes

The Energy Regulatory Commission last March announced a possible electricity rate hike in April due to the effects of summer and high oil prices. However, the Department of Energy said it is taking measures to prevent excessive increases in consumers' electric bills.

According to GMA Newsfeed, energy supply is often thin during summer, but a report by the Institute for Climate and Sustainable Cities (ICSC), the power supply is expected to be sufficient in the Luzon, Visayas, and Mindanao grids from April to June 2026, although reserve margins are thin.

Aside from supply, consumers expressed concern about the combined effects of the summer season and high oil prices on electricity bills.

In March, the Energy Regulatory Commission (ERC) said an electricity rate hike is expected this April.

According to the National Association of Electricity Consumers for Reforms (NASECORE), the electricity rate hike could reach P2-4/kWh, or an additional P400 to P800 in electricity bills for a 200kW consumption, if the supply is taken from the Wholesale Electricity Spot Market (WESM), a venue where electricity is traded or sold as a commodity or product.

It could be compared to a market where generating companies, retailers, and distributors can buy and sell an extra supply of electricity.

The increased electricity price in the WESM may be passed on by distributors to consumers through their electricity bills.

Amid the high price of petroleum products, it is possible that the price of electricity in WESM could hit P9/kWh, based on an estimate by the Independent Electricity Market Operator of the Philippines (IEMOP).

Before the crisis in the Middle East, the price in WESM was at P5/kWh.

Government measures

However, the government is taking some measures to prevent sudden increases in electricity rates.

Starting March 26, the ERC has temporarily suspended the WESM, meaning that optimal dispatch of cheaper energy sources such as renewables will be implemented.

The ERC is also currently working on the government having control over the price in WESM.

If followed, price increase in WESM could only be at P2/kWh, and possibly limit additional increases to consumers' bills.

The DOE also said that it is expediting the completion of renewable energy projects that will provide cheaper and additional electricity supply.

“We are pushing for 1,471 megawatts in renewable and energy storage projects na matapos siya by April 2026, para kahit tumaas man ‘yung iba, kahit hindi natin magamit ‘yung ibang power natin dahil sobrang mahal or iwasan natin para hindi umakyat ‘yung presyo ng Meralco or mga electric coop natin,” said DOE Secretary Sharon Garin.

(Even if other power sources increase or we cannot use them because of higher prices, we can avoid it so that the price of Meralco or electric coops do not increase.)

According to the DOE, there are energy projects that are targeted to be operational by April 2026.

These are:

• 12 solar projects,
• six hydroelectric plants,
• two biomass facilities,
• one wind project and
• one 20-megawatts of renewable energy storage system

Aside from prioritizing renewable energy, the dispatch of coal-fired generating units is also being prioritized over more expensive Liquefied Natural Gas (LNG) and oil.

“Coal-fired generating units were dispatched higher than their scheduled levels, while natural gas-fired power plants operated below scheduled dispatch, reflecting efforts to conserve limited and costlier fuel resources,” said DOE Undersecretary Rowena Cristina Guevara.

We were expecting mga P9 ang increase but hindi gano'n kalaki pala 'yung magagawa kasi nag-intervene ang ERC at saka 'yung DOE,” Garin said.

(We were expecting a P9 increase, but it wasn't that much because the ERC and the DOE intervened.) –NB, GMA News