Lighting the Nation Amid Napocor’s Troubles
- October 30, 2025
In September, former lawmaker Jericho Nograles assumed leadership of the National Power Corp. (Napocor), pledging to strengthen its role in delivering sustainable power to off-grid communities “while ensuring fiscal discipline, operational efficiency and innovation, consistent with the country’s energy transition goals.”
According to Nograles, cutting diesel dependence in off-grid areas is a priority, marking a renewed push toward renewable energy (RE). He noted that most of Napocor’s generation facilities still rely on diesel, which remains costly and unsustainable, with generation costs averaging around ₱30 per kilowatt-hour (kWh). At the same time, consumers pay only about ₱7. The government continues to absorb the large subsidy gap to keep electricity affordable in remote communities.
Nograles aims to begin phasing out diesel within his first six months in office as part of Napocor’s plan to shift all Small Power Utilities Group (SPUG) plants, which supply electricity to off-grid and remote communities, to RE by 2030. However, he admitted the rollout has been slow, with hybrid projects under the Missionary Electrification Plan unlikely to meet 2025 targets as deadlines near.
Funding remains a key challenge, with Nograles admitting that “Napocor can’t do this alone” and calling for support from stakeholders.
A Manila Times editorial pointed out that increasing consumer rates are unlikely, given that many of Napocor’s customers live in low-income communities. Government funding, meanwhile, is limited by existing subsidies and fiscal constraints.
(Also read: Offshore Wind Sparks Fisherfolk Backlash)
Electricity rate hike controversy
Recently, consumer groups and electric cooperatives (ECs) objected to the Energy Regulatory Commission’s (ERC) approval of an interim rate hike for Napocor’s SPUG.
The adjustment, set to take effect in November, will raise off-grid electricity rates for commercial and industrial users in Mindoro, Marinduque, Palawan, Catanduanes, Masbate, Romblon, Tablas, Camotes, Siquijor, Bantayan, Basilan, Sulu, and Tawi-Tawi.
The ERC said the increase was based on actual fuel and operational costs, calling it a necessary step while awaiting a final ruling.
The Romblon Electric Cooperative (Romelco) urged the Energy Regulatory Commission (ERC) to halt the power rate hike, saying it would burden Romblon residents and businesses still recovering from Typhoon Opong, which prompted a state of calamity in September.
The two-year adjustment totals ₱1.8564 per kWh, raising the overall increase to ₱3.6060 per kWh. Romelco warned that future rounds could extend the higher rates to households.
Romelco General Manager and Association of Isolated Electric Cooperatives (AIEC) President Rene Fajilagutan vowed to appeal the decision, warning that some businesses could see power bills soar by up to 600%.
According to Maitet Diokno from the Center for Power Issues and Initiatives, the problem lies in the high price of diesel. “Transporting diesel to remote islands adds to the expense,” she wrote. “If electric cooperatives were to charge their customers the true cost of generating electricity, this would be extremely unaffordable.”
She also pointed out that the gap between the actual generation cost and the subsidized rate is covered collectively by consumers, even those not served by Napocor. “Who pays for the difference between the true cost and the subsidized rate? We all do, through the universal charge for missionary electrification,” she noted. “This is currently at 22.38 centavos per kilowatt hour that we consume.”
Diokno also warned that the recent ERC-approved rate hike would affect not just households but the broader local economies of off-grid islands, compounding hardships for residents who already face low incomes.
“Annual electricity inflation for the bottom 30% of households in Mimaropa has averaged 13.9 percent from 2022 to 2024,” she wrote. “With poverty and inflation rising at the same time, how could the ERC and NPC possibly think that households could afford to pay a higher SAGR (subsidized approved generation rate)?
Also read: Power Rates Could Go Down by P3/kWh by 2030, Says DOE)
Napocor’s service history
Established in 1936, Napocor’s mandate was to develop the country’s hydroelectric resources and provide centralized power generation.
Over the next several decades, particularly from the 1960s to the 1990s, the corporation expanded rapidly to become the nation’s dominant electricity producer. It absorbed many smaller local facilities, acquired Meralco’s generating units in the 1970s, and financed large-scale power projects—many of which relied on costly foreign loans and build-operate-transfer (BOT) agreements.
In the 1990s, Napocor controlled much of the country’s energy sector but struggled with inefficiencies and rising debt, which reached ₱830.7 billion by 2001, worsened by the 1997 Asian Financial Crisis.
To tackle these mounting financial pressures, the 2001 Electric Power Industry Reform Act (EPIRA) unbundled generation, transmission, and distribution functions, mandated the privatization of Napocor’s generation and transmission assets—excluding those required for missionary electrification—and significantly reduced its role.
Diokno described today’s Napocor as “a shadow of its former pre-EPIRA self.” She wrote that the corporation has been largely scaled down to supplying power to remote areas that private utilities and rural cooperatives cannot profitably serve. The corporation operates 279 plants across Luzon, Visayas, and Mindanao, but only 83 deliver round-the-clock service, and most rely on diesel fuel.
“In 2023, the NPC expensed nearly ₱16 billion of its diesel stock,” Diokno wrote. “And its service is far from reliable.”
Private sector involvement needed
The government aims to reach full household electrification by 2028. About 25.3 million households now have electricity, leaving around 2.5 million households without service, according to recent DOE data. This translates to roughly 10.25 million Filipinos who still lack access to power.
The government estimates that a minimum of ₱85 billion will be required to extend electricity access to every household across the archipelago.
Napocor plays a pivotal role in this endeavor; its Missionary Electrification Plan for 2025–2029 outlines strategies to extend electricity access through diverse electrification solutions, including microgrids and RE systems.
However, a lack of funding remains a key challenge, and increased private sector involvement could play a pivotal role in addressing it.
A Manila Times editorial noted that attracting private sector investment will be no easy task. “In order to attract private sector investment, Napocor, along with the DOE and other agencies, has to find ways to present a value proposition for an electricity market that is under the auspices of Napocor precisely because it is, in most areas, a profoundly unattractive investment,” it stated. “It is not an impossible challenge, but it will be difficult.”
Power distribution is just as critical as power generation in achieving nationwide electrification. EC reforms play a crucial role in strengthening the Philippines’ electricity network, with private partnerships and takeovers proving instrumental in modernizing infrastructure, boosting service reliability, and ensuring that communities receive consistent and sustainable power.
For instance, MORE Electric and Power Corporation’s (MORE Power) takeover of areas previously served by Iloilo Electric Cooperatives (ILECOs) highlights the impact of private partnerships. In 2022, Republic Act No. 11918 granted MORE Power an expanded franchise covering 15 municipalities and Passi City, prompting opposition from ILECOs. The legal dispute reached the Supreme Court, which in July 2024 upheld the law, ruling that multiple franchises in the same area are constitutional when they serve public interest by promoting competition and improving service.
Following the ruling, MORE Power moved forward with modernizing infrastructure, including installing SCADA systems for real-time monitoring and rolling out underground distribution networks, aiming to reduce outages and enhance service reliability.
This case demonstrates how EC reforms, supported by private investment and judicial backing, can accelerate electrification, improve operations, and benefit communities while ensuring regulatory compliance and public accountability.
With strategic private-sector involvement, even agencies like Napocor could potentially reach similar levels of efficiency and service quality.
Sources:
https://www.manilatimes.net/2025/10/11/opinion/editorial/napocor-needs-additional-support/2198737
https://www.philstar.com/business/2025/10/06/2477731/napocor-targets-diesel-cut-grid-areas
https://www.rappler.com/voices/thought-leaders/opinion-billion-peso-heist-electricity-consumers
https://www.adb.org/sites/default/files/publication/28334/wp044.pdf
https://www.napocor.gov.ph/historical-background
https://en.wikipedia.org/wiki/National_Power_Corporation#cite_note-1
https://legacy.doe.gov.ph/sites/default/files/pdf/electric_power/medp_2016-2020.pdf
https://legacy.doe.gov.ph/sites/default/files/pdf/qtp/qtp_faqs.pdf
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/95596
https://sc.judiciary.gov.ph/sc-exclusive-franchises-are-prohibited-by-the-constitution
