2023 Working Paper (2023-01)

Working Paper 2023-01
The Nature and Causes of High Philippine Electricity Price and Potential Remedies

Majah-Leah V. Ravago

Abstract 

This paper investigates the nature and causes of high electricity prices in the Philippines. To understand the nature of the problem, we examine the industry’s structure and the ensuing composition of the electricity tariff. Since 2001, the electricity industry has been undergoing a gradual transformation. From being vertically integrated, where the government holds the monopoly over transmission and owns most of the generation assets, the functions of generation, transmission, distribution, and retailing have been unbundled, and, at the same time, an electricity spot market has been established. Concurrent with the unbundling of functions is the unbundling of electricity rates. Two decades since the reform, the electricity rates in the Philippines are still among the highest. The paper identifies the causes and offers potential remedies.

Keywords: Electricity, Philippines, deregulation