Unpacking the power bills

The economic turmoil brought about by the ongoing crisis in the Middle East has led to heightened attention to the energy situation of the country. To be sure, our energy security had been precarious even before the events of Feb. 28, given that we import almost 100% of our oil requirements, and around 60% of our power mix comes from coal which is likewise almost 100% imported.

While the increased attention on our energy situation has finally mainstreamed to everyday conversations on the search for long-term solutions to our energy insecurity, it has also, unfortunately, fomented a lot of confusion that distracts us from recognizing that which truly matters if we were to genuinely work towards addressing the issue of affordability.

Last week, I was invited by Prof. Cielo Magno of the UP College of Economics to join her podcast to help her viewers/followers understand some burning issues concerning the rising electricity prices, particularly, whether the subsidies incorporated in our bills are causing the increases. To aid in the discussion, we used a sample power bill issued by Meralco to a residential customer. In going through the components of the bill and addressing questions coming from the audience, we dispelled some misconceptions and myths about the Philippine power system which continue to impede the ability of consumers to exercise their rights as consumers and their power of choice. I provide here some of the hard truths we need to understand about our electricity prices.

Truth No. 1. Unlike our neighbors in the Asia, the Philippine Government does not subsidize power rates. This has been the case since 2001 when the Electric Power Industry Reform Act (EPIRA) was passed. Our power industry (except for the off-grid areas) has since been market-based and private sector-driven. This means that the Government no longer invests in projects that generate, transmit, deliver, or sell electricity to Distribution Utilities (DUs) or Electric Cooperatives (ECs). These activities have been left in the hands of the private sector. Since the Government is no longer in the power business, its control over power prices has become limited, considering also that EPIRA declared that the power generation business is: a.) not a public utility, although it remains one that is imbued with public interest; and, b.) deregulated, meaning, the Government no longer needs to review, approve, or restrict the price at which generators sell their power, except to the extent of the power they sell to regulated entities, such as DUs and ECs.

Truth No. 2. The power bill is long because the charges have been unbundled. This is true not only for Meralco but for all DUs and ECs in the country. EPIRA requires that consumers be informed of all components of the total amount payable for that billing month. The breakdown of all the charges is thus meant as a mechanism for transparency. The design is intended to inform the consumer of the amount of electricity in kilowatt-hours (kWh) used for the month, the amount in pesos charged for each of the bill components either on a flat monthly rate or multiplied by the kWh consumption for the month. The consumer, therefore, knows exactly what he or she is paying for and how an increase or reduction in consumption impacts the total bill. In fact, recent discussions regarding the fairness or unfairness of passing on subsidy charges are enabled by the unbundled design of the power bill. If our bills were not unbundled, they could be much shorter, yes, but we, as consumers, would not really know which charges are tucked into the amounts that we are required to pay.

Truth No. 3. Not all subsidies are created equal. It is true that all the subsidies listed in our power bills arise from government-mandated programs, many of which are pursuant to the EPIRA (the Lifeline Rate Subsidy, the Universal Charges for Missionary Electrification, the Environmental Charge, Stranded Debts) while others are based on special laws or policy issuances (the Senior Citizen Subsidy, the Feed In-Tariff Allowance or FIT-All, and the Green Energy Auction Allowance or GEA-All). Note, however, that one set can be considered as pure subsidy in the sense that the consumers who pay for these subsidies are not the ones who actually consumed the electricity or availed of the service for which the Lifeline Rate Subsidy, Senior Citizen Subsidy, and the Universal Charges are paid. On the other hand, the FIT-All and GEA-All are charges for renewable energy (RE) actually supplied to the system, allocated among and consumed by all consumers on the grid. These, therefore, are more of generation charges than pure subsidies.

Truth No. 4. The subsidies are not the reason behind increasing power bills. While there is much to be improved in the system behind electricity subsidies, this should not distract us from the reality that generation charges — not subsidies — account for more than 50% of the power bill for most, if not all, DUs/ECs.

Based on Meralco’s latest posted summary schedule of rates, for example, as presented in the table (Table 1) prepared by the Institute for Climate and Sustainable Cities (ICSC), generation charges account for 65.51% of the April 2026 bills to its residential customers. Meanwhile, the aggregated impact of all the subsidies (appearing on the bars to the right-most side of the table, after distribution charges for 12.56% of the bill) is even less than the 6.06% attributed to system loss charge.

This case is true not just for the April 2026 billing but also for the last 15 billing months (see Table 2).

For 2026 thus far, more than 50% of Meralco’s generation mix was sourced from natural gas plants, with 35% of the mix coming from coal-fired power plants. Only 7.53% was sourced from the Wholesale Electricity Spot Market (WESM). (See https://presyo.icsc.ngo/home, data on other DUs/ECs are also available on this platform). This means that at least 85% of Meralco’s generation charges for 2026 were to pay for power supplied under its bilateral power contracts or power supply agreements.

According to data from the Philippine Statistical Authority, the residential sector accounted for almost 30% of the country’s total energy consumption as of 2023, followed by the commercial and industrial (C&I) sectors with a combined share of around 30% as well. If efforts can focus, therefore, in addressing the generation charge that accounts for the biggest portion of the power bills of 60% of the country’s energy consumers, this can impact significantly on increasing the ability of households to afford other basic needs and in creating a more competitive environment for our C&I sectors.

Monalisa C. Dimalanta is a senior partner at Puyat Jacinto & Santos Law (PJS Law). She was the chairperson and CEO of the Energy Regulatory Commission from 2022 to 2025, and chairperson of the National Renewable Energy Board from 2019 to 2021.