Energy security, consumer choice and the ERC

Energy and power security means ample supply of electricity with no blackout, there is consistent expansion of power supply to meet rising demand yearly.

- BIENVENIDO S., OPLAS JR.

Choice is the main interest of consumers, a product or service can be expensive but if it gives the consumers satisfaction then it is worth the money. And the main purpose of a regulator like the Energy Regulatory Commission (ERC) is to protect consumers and ensure they have more choices.

With these brief definitions, we now discuss three important recent development in the Philippines power sector.

Cheap electricity via CSP

The Competitive selection process (CSP) by private distribution utilities (DUs) like Meralco and electric cooperatives is among the important provisions of the Electric Power Industry Reform Act (EPIRA) of 2001 (RA 9136).

The latest need of Meralco for 600 MW baseload (ie, running 24/7) capacity resulted in really competitive prices for the consumers. The winners announced during the bid opening last August 27 were SMC’s Masinloc Power for 500MW at P5.60/kwh and Aboitiz Power’s GNPD for 100MW at P5.74/kwh, and both are coal plants. These are indeed cheap electricity for two reasons. One, these are way below Meralco’s reserved price for levelized cost of electricity (LCOE) at P7.26/kwh. Two, they are lower even in prices contracted several years ago.

I checked the prices of Meralco contracted prices in 2018 where the Philippine Statistics Authority (PSA) rebased the consumer price index (CPI) at 2018 = 100. The CPI in August 2024 was 122.5. So to convert previous prices to August 2024 prices to consider the effect of inflation, the formula is: (Price Aug. 2024 = Price Aug. 2018 x 1.225).