Electricity sector in the Philippines

In January 2022, President Rodrigo Duterte signed into law Republic Act 11646 that aims to spur microgrid development in unserved and underserved areas nationwide to achieve the government's goal of 100 percent electrification in the country.

During World War II the transportation infrastructure of Meralco was destroyed and instead of rebuilding the railway, the company focused its efforts onto its electric services.

[8] According to International Renewable Energy Agency, the country has a total potential of 10 GW untapped hydroelectric power.

Despite its huge potential, there has never been any operational WtE project to date due to the lack of financing and management support in the city and municipality levels as well as the conflict with the prevailing “Philippine Clean Air Act (RA 8749)” which prohibits incineration of MSW.

[9] According to a feasibility study on waste-to-energy (W2E) of municipal solid waste (MSW), a 100 ton/day W2E plant in the Philippines has an estimated energy generation potentials of 21 GWh/year from incineration, 24 GWh/year from gasification, and 24 GWh/year from pyrolysis.

[9] The Philippines being situated on the fringes of the Asia-Pacific monsoon belt, exhibits a promising potential for wind energy with 76.6 GW.

[11] Power transmission in the Philippines is a common carrier business (i.e. regulated by the government, serves its franchise area without discrimination, responsible for any losses incurred during delivery).

Pursuant to the Electric Power Industry Reform Act (EPIRA) and the Transmission Development Plan or TDP,[12] maintenance and operations of the nationwide transmission system was subjected to competitive public bidding conducted by the Power Sector Assets and Liabilities Management (PSALM).

From November 3, 1936 to March 1, 2003, government-owned National Power Corporation (NAPOCOR/NPC) owned, operated, and maintained the transmission grid and its related assets and facilities.

Due to the implementation of Electric Power Industry Reform Act (EPIRA) or Republic Act 9136 one year and nine months earlier on June 8, 2001 signed by President Gloria Macapagal Arroyo which resulted in the creation of another government-owned corporation National Transmission Corporation (TransCo) 18 days after the law was approved on June 26, 2001, NAPOCOR/NPC took over the operations, maintenance, and ownership of the power grid to TransCo on March 1, 2003 as mandated on RA 9136 or EPIRA that organized the industry into four sectors: generation, transmission, distribution, and supply.

However, despite that EPIRA and concession agreement stating that the grid and its related assets and facilities will remain national government ownership, right-of-way or portions of a power line and lands where the transmission structures stand or located that were acquired or designated starting with the turnover of operations and maintenance of the grid from TransCo to NGCP on January 15, 2009 (whether using secondhand (NAPOCOR/NPC and TransCo-era) or entirely new structures) are using the name of NGCP, as provided on its franchise (Republic Act 9511) and concession agreement where it is authorized to exercise the right of eminent domain necessary for the construction, expansion, and efficient maintenance and operation of the transmission system and grid and the efficient operation and maintenance of the subtransmission systems which have not yet been disposed by TransCo thus NGCP acts as the temporary owner of these assets and facilities and they will be transferred to TransCo once the NGCP concession period ends.

One characteristic of the grids is that most bulk generation sites are found far from the load centers, necessitating use of long-distance transmission lines.

[26] Also, most transmission infrastructure are affected by outside factors and aging, showing their signs of corrosion as time goes by which necessitated the need to paint the steel poles, lattice towers, and portal towers with either grey or a shinier aluminum paint to provide protection from factors that cause the structures to corrode and extend their service lifespan.

TransCo is also responsible for protecting the national government's interests by monitoring NGCP's compliance with the standards set by its concession agreement with NGCP, congressional franchise and other relevant laws, handle existing cases such as right-of-way (portion of a power line) and lands where the transmission structures stand acquired and designated, structures built, and other claims that were accrued prior to the turnover of operations and maintenance of the power grid to NGCP on January 15, 2009, divest remaining sub-transmission assets to technically and financially qualified electric distributors nationwide, and undertake the operations, maintenance, consultancy and other technical services for the Philippine Economic Zone Authority (PEZA) and Authority of the Freeport Area of Bataan (AFAB).

Retail rates charged by distribution utilities are subject to regulation of the ERC under the principle of full recovery.

The wheeling charge follows the principle of reasonable return on base (RORB) which allows the distribution utility to operate viably as determined by the ERC.

These are controlled by a board of directors elected by member-consumers and their management and operations supervised by the National Electrification Administration.

Pursuant to EPIRA, the implementation of retail competition and open access allows for the establishment of a contestable market.

According to several articles and news sites, the Philippines faced a power supply shortage leading to rolling blackouts across the country during the years 2014–2015.

[32][33][34] According to several articles such as from Rappler, the Malampaya gas facility shortage is responsible for 40-45 percent of Luzon's grid in terms of electricity consumption.

Glitches and pipe leaks play a big role in the shortage of electricity as it affects the gas flow restriction for safe operations in the deep water gas-to-power project.

There is no guarantee that the Malampaya gas facility will operate perfectly which is why it is advised to practice energy efficiency and conservation mainly because of power shortage and rate hikes.

[35] According to several articles, EPIRA introduced reforms, including the restructuring of the power sector leaving a heavy dent on the states budget because of the high cost of maintenance.

All the Generators in Luzon and Visayas submit offers (MW quantity and corresponding price) to be scheduled and thereby provide electricity to the Grid.

At the end of the month, all the hourly schedules of the trading participants, measured through their electricity meters, are accounted for, for settlement.

After completion of the ongoing software audit, IEMOP will shift to the New Market Management System (NMMS), which it procured in July 2015 to implement the enhanced WESM design.

The NMMS will allow for the shorter trading interval of five minutes and for a more efficient and reliable scheduling and pricing in the market.

IEMOP facilitates the fulfilment of one of EPIRA's main goals – competition at the retail level The reforms instituted in Republic Act No.

With such power of choice, they can contract with retail electricity suppliers (RES) rather than be supplied by distribution utilities as part of the captive market.

It is committed also to pursue and support all initiatives to further refine the existing retail market rules and processes as part of its mandate to promote further transparency, efficiency, and competition in the WESM.