EXPLAINER: Why is electricity expensive in the Philippines?

The average residential electricity rate reported in the country as of June 2026 has reached P12.43 per kilowatt hour, which is higher than Singapore's.

This makes the Philippines with the highest residential electricity rate in Southeast Asia, per the Department of Energy (DOE).

The DOE explained that electricity prices in the country surged because power plants using expensive fuel were forced to operate during the outages last summer, which coincided with an increase in electricity demand.

Last June, DOE data showed that Busuanga Island Electric Cooperative had the highest residential rate at P24.92 per kilowatt hour.

Meanwhile, the Manila Electric Company (Meralco) had an above average rate of P14.48 per kilowatt hour as of June.

However, households may still have to pay more in the electricity bills in the comings months as the prices of fuel products continue to spike.

Before the passage of Electric Power Industry Reform Act (EPIRA) in 2001, the National Power Corporation handles most of facilities generating power. But the law unbundled the operation of power generation, transmission, distribution, and retailing.

The generation and retailing of electricity was privatized due to EPIRA.

EPIRA was supposed to invite more investors, but households were only burdened.

"Actually, bukod tangi 'yung Pilipinas at Singapore na may highly privatized na kuryente. Kaya hindi coincidental 'yung dalawang pinaka-privatized na power sectors sa rehiyon, ito rin ang may dalawang pinakamahal na kuryente sa rehiyon dahil ginagawang negosyo," said IBON Foundation executive director Sonny Africa.

(Actually, the Philippines and Singapore are unique in having a highly privatized power sector. So it's not a coincidence that the two most privatized power sectors in the region also have the two most expensive electricity rates in the region, because it's being run as a business.)

IBON Foundation believes that the monopoly in the country's energy sector has allowed firms to set prices on electricity. This is far from other neighboring countries wherein the government runs the electricity services.

"Sa ngayon, humigit kumulang lima hanggang walong kompanya ang nagko-control ng humigit kumulang 80% ng power generation at distribution. So essentially halos monopolyo ng iilang kompanya lamang 'yung pag-generate ng kuryente at pag-distribute ng kuryente," said Africa.

(Right now, roughly five to eight companies control around 80% of power generation and distribution. So essentially, the generation and distribution of electricity is almost a monopoly run by just a few companies.)

Under the EPIRA law, the charges in the electricity bill are also unbundled. For example, in the Meralco bill, one can notice the itemized generation charge, transmission charge, distribution charge, taxes, and system loss charges.

This is because the law allows the actual costs of electricity generation, transmission, and distribution to be passed on directly to consumers through pass-through charges. In contrast, other countries in Southeast Asia subsidize these electricity bills.

Another reason for the high electricity prices in the country is the dependence on coal and natural gas, which are imported from abroad.

If coal prices surge, the generation charge in your electricity bill will also go up.

But why can't the country invest on cheaper renewable energy alternatives?

"Kasi hindi nag-i-invest sa renewables 'yung mga pribadong negosyante. Para kumita sa renewables, para maging self-paying 'yung renewable energy sources, dapat mag-invest ka sa imprastruktura na 'yun na baka tumagal ng 10 taon o 15 taon bago medyo may return silang makuha doon. Kung negosyante ka, hindi ka maghihintay ng limang taon o 10 taon," said Africa.

(Because private businessmen aren't investing in renewables. To profit from renewables—for renewable energy sources to become self-paying—you have to invest in infrastructure that might take 10 or 15 years before seeing a return. If you're a business owner, you won't wait five or 10 years.)

For its part, Meralco said that it supports the government's bid to reduce electricity rates.

But even if the system loss charges are removed from electricity bill, it will only slash 5% from the bill. —Vince Angelo Ferreras/KG, GMA News