First of two parts
FIRST of all, as I am writing this on Monday morning, June 8, word is just coming in about the powerful earthquake that struck the southern portion of Mindanao, and seems to have hit General Santos City particularly hard. This occurring on the first morning of classes for the new school year is a nightmare scenario, and while we can take some solace that the school system here, both public and private, is generally quite safety-conscious and prepared with respect to the various natural disaster risks that plague this country, it is a deeply worrying situation.
Thoughts and prayers are kind sentiments, but what is most important now is that the government moves quickly to respond. As for the rest of us teeming millions, we should take care not to patronize or spread sensationalist or fake news, which is a second plague that always follows these kinds of calamities. Along those lines, if I may offer a plug for one of my own go-to sources of good information, I would recommend the GeologyHub YouTube channel, which offers quick and credible updates on seismic and volcanic events; as this was the biggest one anywhere on Earth in the past couple of months, I would expect the channel would post some information within the next few hours.
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Now back to today’s regularly scheduled program. On the occasion of its 25th anniversary, the Energy Regulatory Commission (ERC) prepared a commentary entitled, “Why is my electricity bill so high?” which was published in The Manila Times on June 8. This has been a sore subject for the public since the US-Israeli war against Iran upended the world’s energy supply chains, and numerous explanations have been offered for why that crisis had an almost immediate, outsized impact on our power bills. ERC’s commentary is quite long, but you can read it for yourself at https://www.manilatimes.net/2026/06/08/supplements/why-is-my-electricity-bill-so-high/2360142.
I do not think everyone will be satisfied with ERC’s explanation; I have some issues with it, which I will get into in detail below. But, I would like to emphasize that I do not mean to antagonize the agency, or its current chairman, lawyer Saturnino Juan. Under both Juan and his predecessor, Monalisa Dimalanta, the ERC has distinguished itself for openness and willingness to engage in discussion with the media, the public and industry stakeholders. Monalisa started it and Nino improved on it, and it is refreshing, because it is not common among government agencies. That certainly does not mean the ERC is always correct in its point of view — not by a long shot — but at least the leadership is willing to discuss issues as mature adults with a sense of public-service responsibility, and that’s all anyone can demand.
Having said that, there are some things about ERC’s explanation of high power bills that need to be challenged, although there are some good points.
ERC explains that due to the partial privatization and deregulation of the power industry under the Electric Power Industry Reform Act (Epira) of 2001, it only regulates the distribution and transmission portions of the bill, although its description of these as being only roughly 20 percent of the average household bill is a bit off. Generation, which is essentially unregulated, makes up 50 to 55 percent of one’s bill; distribution makes up 15 to 20 percent; and transmission accounts for about 10 percent. Roughly 15 percent of the bill consists of various subsidies and taxes, and between 5 and 8 percent is made up of the system loss charge. ERC indirectly regulates these by way of rate-setting for distribution and transmission; it also sets the rates for the green energy auction and feed-in tariff allowances, as well as the reference ceiling prices per kilowatt-hour for the various types of generation put up for bid in the green energy auctions.
Even in generation charges the ERC has some influence, in that it approves power supply agreements, of which the proposed generation charge from a supplier to a distributor is obviously a key component. So in reality, ERC’s regulatory activities directly or indirectly affect 40 to 50 percent of one’s monthly electricity bill, making it a fair target for public disgruntlement over high costs. It can do quite a bit to ease “bill shock,” although it is fair to say that would not be an uncomplicated process.
However, it is right for the ERC to point out that basic generation costs are the biggest problem, which it attributes to “geography, resource endowment, legacy policy burdens, and a cost of capital that remains higher than our neighbors,” in that order. Let’s look at each of these in turn.
First, geography. While there is ostensibly a “national” grid, there are really three separate ones, for Luzon, the Visayas and Mindanao; the interconnections between them are limited to about 450 megawatts (although that will increase in the near future), so essentially each must stand on its own. Geography, however, is a shibboleth in that case; there are three grids and there will always be three grids, so the focus should be on ensuring abundant generation supply in each of them. There is not abundant supply in each of them to comfortably meet expanding demand, so the price of electricity is higher. Simple as that.
Resources are indeed a factor; we rely on imports for more than 90 percent of our fuel, particularly coal, oil, and liquified natural gas (LNG), which provide most of our power. Most of our domestic coal is exported, and even if it were not, it would not be sufficient to meet our demand. The Philippines produces some LNG, but not a great amount, and to make matters worse — thanks to deregulation of the oil industry — domestic LNG prices are indexed to the world market, in US dollars, as is the rest of our imported fuel. This makes all fuel prices subject to changes in the peso, which can, as it is at the moment, raise fuel costs even without the market price changing.
Taxes and subsidies, particularly for stranded debts from the pre-deregulation National Power Corp., are burdens imposed on consumers as a matter of policy choice by the government, because that is what is specified in the Epira law. Likewise the system loss charge, which is a ratepayer subsidy to the industry. The ERC has no control over these charges, although as noted above, it can indirectly affect their magnitude to a limited extent through its rate-setting authority.
High cost of capital is a huge economic obstacle, one that affects investment in everything here, not just the energy industry. That is something that is completely out of ERC’s hands, and so it does not get into that factor. In the second part of this column, I’ll discuss a few ideas of what ERC in particular and what policymakers in general ought to be doing to address high power costs.
ben.kritz@manilatimes.net
Bluesky: @benkritz.bsky.social
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