AFTER nine energy secretaries and six energy regulatory chiefs over the last two decades, the country’s power sector underwent transformative changes, many of which were anchored on major policy reforms.
In brief, EPIRA divided the power industry into four distinct sectors: generation, transmission, distribution, and supply. This opened the sector to private developers, encouraged competition, and enabled much-needed investments in new power projects.
‘EPIRA initiated the restructuring of the electric power industry and the privatization of government interests in the generation and transmission sectors.
The primary objective of these reforms was to foster competition within the generation and supply sectors while enhancing regulatory oversight in the transmission and distribution sectors,’ said ERC Chairman Francis Saturnino Juan.
The RE law, meanwhile, laid the foundation for the clean energy transition. It created a framework of incentives that encouraged private generators to invest in RE. This law, combined with the growing demand for cleaner power, has accelerated the entry of renewable technologies into the energy mix.
In 2024, 794 megawatts (MW) of new renewable capacity were installed. This exceeds the combined total of the previous three years. Today, renewables account for more than 20 percent of installed capacity, and this share continues to grow.
‘Over the past two decades, the Philippine energy sector has taken big strides – EPIRA opened the market, while the Renewable Energy Act enabled clean energy to gain ground,’ commented ACEN Corp. President Eric Francia.
More importantly, the RE law is a move to reduce reliance on imported fuels, a move towards energy transition, Developers of Renewable Energy for AdvancedMent, Inc. (DREAM) President Jay Layug pointed out.
AS trading platform
Aside from EPIRA and the RE law, Meralco PowerGen Corp. (MGen), the power generation arm of Meralco, cited another important development- the launch of the reserve market (RM). This is a trading platform for ancillary services (AS) or power reserves to secure the grid’s stability and reliability.
All of these reforms brought undeniable improvements. ‘They expanded private sector participation, increased generation capacity, and introduced more competitive dynamics,’ said MGen President Emmanuel Rubio.
According to the Department of Energy (DOE), these milestones highlight the progress in advancing market operations in the power sector.
‘The continuous development of WESM and the RM is building a more efficient, competitive, and responsive electricity market, ensuring improved reliability, better price signals, and stronger resource sharing across the country,’ it said.
As of July 2025, the DOE reported that the country’s total installed capacity reached 31,701MW, with a total dependable capacity of 27,812MW. It also recorded 16,783MW from committed power projects and 109,336MW from indicative power projects.
Upgrading the transmission network
IN 2020, a bold policy move from the DOE was the moratorium on new coal power projects. To achieve the 35-percent RE share in the energy mix by 2030 and 50 percent by 2040, the agency had to impose this to transition the country’s power supply away from fossil fuels, aligning with global climate goals.
Likewise, as of July 2025, coal-fired power plants contribute 13,000MW or 41 percent of the country’s total capacity.
The DOE is also the driving force behind another major milestone-the inclusion of nuclear energy in the mix. Recently, the Philippine Atomic Energy Regulatory Authority (PhilATOM) was established, which likewise led to the country’s election to the International Atomic Energy Agency Board. These developments put the country a step closer to realizing its target of 4,800MW of nuclear energy through 2040.
Other developments cited by the ERC over the past 20 years include the awarding of a transmission concessionaire to the National Grid Corporation of the Philippines (NGCP); rate unbundling of distribution utilities (DUs); removal of inter-class subsidies the distribution utilities’ rates; commercial operations of WESM; ERC adoption of Performance-Based Regulation (PBR) for setting the DUs’ rates; introduction of open access and retail competition (RCOA); and implementation of competitive selection process (CSP), among others.
Transmission challenge
When NGCP took over transmission operations in 2009, it was faced with the monumental task of operating, upgrading, and expanding the country’s aging power transmission network.
In just 16 years, NGCP upgraded critical high-voltage transmission lines and substations, resulting in a 167% increase in power delivery capacity, 100% connection of all new power plants, and an 88% increase in generation capacity.
‘Because of NGCP’s drive to strengthen the grid, the company was able to decrease power outages by 84.57 percent, greatly improving the stability and reliability of power delivery across the country,’ it said.
of NGCP’s most notable achievements include the completion of the Mindanao-Visayas Interconnection, which connected the power grids of all three major island groups; the Mariveles-Hermosa-San Jose 500kV transmission line, which further strengthened the reliability of the Luzon power grid; the Cebu-Negros-Panay 230kV backbone, which helped stabilize the power situation in Western and Central Visayas; and the Cebu-Bohol Interconnection, which enabled the transfer of power between the two islands.
With 99 completed projects and a P395-billion investment in the grid, NGCP provided more efficient and reliable transmission services while lowering the company’s part in the electricity bill at just 3.72 percent compared to the 50.1 percent generation charges and 20.67 percent distribution charges.
‘NGCP was able to provide better services and lowered rates-an effective and positive outcome of one of the country’s biggest public-private partnership initiatives,’ the Sy-led firm said.
WESM, RCOA
Notable to the DU’s operations are the establishment of the Wholesale Electricity Spot Market (WESM) in Luzon, Visayas, and Mindanao where electricity prices are driven by supply and demand, as well as the implementation of RCOA which later on formed part of the bigger Competitive Retail Electricity Market (CREM) which now includes the Retail Aggregation Program (RAP) that empowers consumers to choose their own electricity suppliers.
These are among the major transformations that continue to define how Meralco serves its more than eight million customers.
‘This really changed the landscape because it placed consumers at the center and pushed utilities like Meralco to innovate and provide better and more flexible offerings while still ensuring that we live up to our mandate to deliver stable, reliable, and cost-competitive power,’ said Meralco executive vice president and chief operating officer Ronnie Aperocho.
Over the years, the DOE introduced new policies that made the RE law successful by incentivizing RE developers and mandating the use of renewables. ‘We’ve also seen growing interest from households and businesses in solar energy, which Meralco supports through the Net Metering Program,’ which allows customers to install rooftop solar and offset their electricity consumption, Aperocho said.
Through the Renewable Portfolio Standards (RPS), DUs like Meralco are now required to source an increasing portion of their supply from renewables.
Green Energy Auction
Additionally, the Green Energy Option Program (GEOP) has allowed consumers to source their power directly from renewable energy suppliers. Meanwhile, the Green Energy Auction Program (GEAP) has driven even more investment into renewables by providing a market that caters to qualified technologies.
‘In terms of outcomes, many of these reforms and policies have been positive. Competition and market reforms have led to greater transparency, customer choice, and challenged distribution utilities to ensure service quality and efficiency,’ Aperocho added.
With the ongoing transition from centralized to decentralized systems and from captive to contestable customers, Aboitiz Power Corp. has likewise grown in the retail electricity space. By far, it has the highest market share based on demand at 27.27 percent of the total as per the latest ERC data.
The energy sector has indeed made big strides, but with more RE, there is a need for more transmission capacity, AboitizPower noted. The increase in variability also necessitates battery storage systems and reinforces the importance of baseload and flexible generation capacities.
‘Moreover, with the advancement of solar PV, the issue of its footprint on agricultural land has increasingly become more pronounced. With the energy transition in process, the energy sector workforce would also need a more diverse set of talents who can competently meet its evolving demands,’ it said.
Impediments
WHILE renewables are scaling up, ACEN agreed that the challenges in grid stability highlight the urgent need for greater investment in storage and transmission. ‘The next decade holds much promise as the industry accelerates the energy transition and opens the market to broader competition,’ added Francia.
The Independent Power Producers Association (PIPPA) raised similar concerns. ‘There are also operational challenges such as managing constraints for energy storage systems and implementing market interventions when necessary, such as the secondary price cap,’ said PIPPA President Anne Montelibano.
While the price caps are perceived to protect consumers from high WESM prices in the short term, they act as a deterrent for additional investments in generation capacity in the long term. The price caps are not reflective of market conditions that put further pressure on prices in relation to the limited supply.
As structural and market reforms were introduced over the years, consumers still find it hard to feel significant savings.
Consumer group Power for People (P4P) continues to protest the DU’s high electricity rates, which have increased by P3 per kilowatt hour for the past three years. ‘That’s an additional P26 million that consumers are pouring into its coffers every single month today,’ said Gerry Arances, Convenor of the Power for People Coalition.
The group also said there was ‘neglect’ on the ERC’s part for failing to act on the DU’s rate reset for many years.
The ERC chief explained that despite all efforts, his office is still subject to both criticism and commendation. ‘With generation capacity occasionally in short supply, recurring blackouts across the country, and persistently rising electricity prices, despite the restructuring, privatization, and liberalization of the power industry and more than a decade since the ERC’s RCOA declaration, substantial work remains to be done.’