DOE: Rising Electricity Prices Could Have Been Avoided
- February 3, 2025
On January 27, 2024, President Ferdinand Marcos Jr. attended the signing of a memorandum of agreement between the Maharlika Investment Corporation (MIC) and Synergy Grid & Development Philippines Inc. (SGP), which owns a 40% stake in the National Grid Corporation of the Philippines (NGCP). The deal secures a 20% stake in the country’s power grid operator for the Philippines’ first sovereign wealth fund.
Department of Energy (DOE) Undersecretary Sharon Garin noted that the government lacked involvement in the energy sector after Congress awarded NGCP a long-term franchise to manage the transmission network. She said the Maharlika Investment Corporation’s stake gives the government a foothold in the national grid, a step up from no participation. “May nagbabantay na na-representante ng gobyerno (A government representative will now monitor them),” she stated.
(Also read: Cool Weather Spurs Drop in Visayas Electricity Rates)
What the government aims to achieve
MIC President and CEO Rafael Consing Jr. explained that the deal would secure MIC a position on the boards of both SGP and NGCP, granting them two seats. He emphasized that Maharlika’s pioneering investment would help ensure the security and stability of the nation’s electricity infrastructure against potential risks and disturbances.
DOE Secretary Raphael P.M. Lotilla expressed support for the MIC’s investment, saying, “This is a step towards attaining our goal of ensuring security of supply, reliability, affordability, and promoting competition in the power sector.” He added that the MIC’s stake seeks to fast-track the development of transmission infrastructure projects in the country.
In its Facebook post, the DOE explained the key role of transmission lines in the energy sector.
“New generation projects rely on transmission wires to deliver electricity to customers,” it read. “The NGCP, as the country’s single biggest monopoly in the power sector, is responsible for the construction of those high-voltage wires and facilities, and the operation of the national grid system.”
DOE also highlighted the role of NGCP’s Transmission Development Plan in setting the timelines and locations for activating transmission lines and substations. “If these transmission facilities are delayed or their completion dates keep on moving, new generation plants will also be delayed, or they will be left stranded or unused even if ready to operate.”
The government investment in transmission is guided by the Philippine Development Plan 2023-2028, which advocates reassessing transmission financing. Transmission expansion could improve efficiency, lower energy costs, enhance reliability, and reduce market power.
What NGCP failed to do
According to the DOE, 98% of NGCP projects completed between 2016 and 2024 faced delays, some lasting over 9 years. These delays could lead to substantial economic consequences, such as higher electricity costs.
In April 2023, Panay Island suffered a major blackout, with NGCP assuring that upcoming projects would prevent future disruptions. However, another island-wide blackout occurred in January 2024, as both the Mindanao-Visayas Interconnection and Cebu-Negros-Panay 3 projects remained incomplete. This led House Speaker Martin Romualdez to propose MIC’s investment in the power grid. Lotilla and President Marcos Jr. held NGCP accountable for the outages, highlighting the need for government intervention in the sector.
Meanwhile, the Independent Electricity Market Operator of the Philippines (IEMOP) mentioned delayed projects that fueled electricity prices. For example, if the Cebu-Negros-Panay 3 Project were finished earlier, it could have lowered rates by P1.27/kWh in Cebu, P2.03/kWh in Negros, and P 1.74/kWh in Panay.
(Also read: What is the Cebu-Negros-Panay Project?)
Similarly, the long-delayed Mindanao-Visayas Interconnection Project, which was postponed for 28 months, would have reduced rates by P1.99/kWh in Luzon, P1.77/kWh in the Visayas, and P1.30/kWh in Mindanao.
If the Mariveles-Hermosa and Hermosa-San Jose 500 kV Transmission Lines were completed on schedule, it would have reduced electricity prices by P1.47/kWh in Luzon, while the Cebu-Bohol 230 kV Project would have led to a PHP 1.24/kWh decrease in Bohol’s rates.
“The way NGCP can contribute to lower electricity is by ensuring that that rollout indeed happens,” Consing said, explaining that once the transmission grid is expanded, more power providers could connect to the grid, increasing the supply. “And, obviously, just like any commodity, as you’ve got more supply coming in, the present power will, at some point in time, come down.”
Views on the investment
Senate President Juan Miguel Zubiri praised the investment, highlighting its profitability and strategic importance for national security. “The National government should be strategically involved in the control and management of such an important energy backbone of our country,” he stated.
However, Gabriela party-list Representative Arlene Brosas criticized the move, labeling it as “crony capitalism” and expressing concerns over the potential risks to public funds. She questioned the transparency and timing of the deal, urging for thorough scrutiny.
Former Energy Undersecretary Petronilo Ilagan, also the president of the National Association of Electricity Consumers for Reforms Inc. (NASECORE), urged the MIC to prioritize investments in power generation plants rather than purchasing a share in the NGCP. Ilagan stressed that energy generation, not transmission, is the core issue in the power sector.
In a letter dated January 22 to Finance Secretary Ralph Recto, he wrote, “While national security may be a valid concern, we believe that the MIF chose the wrong industry within the energy sector—transmission—when it should be investing in generation plants.”
As of writing, NGCP has yet to release a public statement on MIC’s stake acquisition.
Sources:
https://bilyonaryo.com/2025/01/27/lotilla-maharlika-investment-in-ngcp-to-speed-up-transmission-projects-ensure-reliable-and-affordable-power-supply/power/
https://www.facebook.com/story.php?story_fbid=1147775097139071&id=100057197750633&rdid=QkyM0Hf3oGW5jL8N#
https://www.bworldonline.com/top-stories/2025/01/28/649377/maharlika-fund-to-invest-in-ngcp/
https://www.gmanetwork.com/news/topstories/nation/934328/good-investment-or-gamble-mic-investment-in-ngcp-draw-mix-opinion-from-solons/story/
https://bilyonaryo.com/2025/01/24/maharlika-urged-to-shift-focus-invest-in-power-generation-not-ngcp-stake/power/
