On energy inflation, market suspension, power disruption, and Leviste’s solar inaction

We have four topics to tackle here so we go straight to the numbers and facts, starting with energy inflation.

While our overall inflation last month was 7.2%, inflation in the transport sector was 21.4% and that of people’s operation of their cars, motorcycles, etc. was 66%.

I checked the electricity rates on the Meralco website and saw that the generation charge in the May billing was 17.8% higher than May last year’s. The transmission charge has increased mainly because of the addition of ancillary services (battery and backup oil-gas peaking plants) as more intermittent renewable energy (RE) without battery is added to the grid. The distribution charge is flat while subsidies to off-grid areas and islands via the universal charge for missionary electrification (UC-ME) has increased (see Table 1).

Last week, the Independent Electricity Market Operator of the Philippines (IEMOP) released the Market Operations Highlights for April and reflected on the May billing. It covered February to April. The share of coal in the energy mix at the Wholesale Electricity Spot Market (WESM) has decreased, from 61% in February-April 2024 to 57% in February-April 2026, while the share of solar energy has almost doubled, from 3.6% to 6.3% over the same period.

Spot prices have increased from P4.52 per kilowatt-hour (kWh) in April 2025 to P5.63/kWh in April 2026, mainly because the power margin decreased from 4,585 megawatts (MW) to 4,427 MW over the same period (see Table 2).

The bottom-line is, in both WESM prices and the overall generation rate, the electricity price increase is lower than transport inflation but higher than overall inflation.

Most people accepted and adjusted to the very high fuel prices in March and April without subsidies. There is little justification for electricity subsidies — we have to adjust for these are externally caused price shocks.

MARKET SUSPENSION, LINE RENTAL DISTORTION
The WESM market was suspended from March 26 to April 30. There seems to be a distortion in the payment of line rental (the difference in prices of the generator and customer node corresponding to their bilateral contract declaration or bcq).

The Modified Admin Price (MAP) of the Energy Regulatory Commission (ERC) was meant to maximize coal output and minimize LNG and oil because the rise in the price of coal was much lower than the rise in oil and gas prices. The ERC issued a fixed MAP of P6/kWh for coal to be used for spot energy only, but the implementation of MAP P6 became a nodal price.

Then there was another price, the customer MAP which averages the coal price and the original admin price. Thus, there were three different prices per interval which created the difference in nodal prices, and resulted in line rentals which should not have happened.

There were losers and winners. Coal plants, with their bcq counterparties during the morning to afternoon, have negative line rentals while other technologies have high positive line rentals. Technologies or customers who benefit from negative line rental will not give back, while gencos or customers affected by high line rental payments will not pay.

To avoid distortion, the fixed coal price under MAP should have been used only for spot sales of the coal plant and not applied as their nodal price.

POWER DISRUPTION, YELLOW-RED ALERTS
For three days last week (May 13 to 15) we saw yellow and red alerts raised in the Visayas and Luzon grids.

There was unscheduled maintenance in some big coal plants in Cebu, and the National Grid Corp. of the Philippine’s (NGCP) 500-kilovolt (kV) Tayabas–Ilijan and Ilijan–Dasmariñas transmission lines tripped, which in turn disconnected 2,462 MW of natural gas capacity by LNGPH, particularly the Ilijan (South Premiere Power Corp. or SPPC) Blocks A and B and Excellent Energy Resources, Inc. (EERI) Units 1, 2, and 3, which were disconnected from the Luzon grid and triggered widespread power interruptions across Luzon.

It also prevented the transfer of power from the Luzon to Visayas grid.

In addition, Masinloc Unit 3 (325 MW) had a forced outage.

The Department of Energy (DoE) mobilized the Grid Reliability Task Force (GRTF) composed of the DoE, ERC, IEMOP, the National Transmission Corp. (TransCo) and the Power Sector Assets and Liabilities Management Corp. (PSALM).

ERC Chairman and CEO Francis Saturnino C. Juan visited the System Operations Command Center and wrote to NGCP President and CEO Anthony L. Almeda seeking a detailed account covering date, time, duration of each yellow and red alert, areas affected, generating units, and transmission lines, among others.

The rotating hours-long blackouts via manual load dropping (MLD) in many areas of Visayas and Luzon was bad. It further showed that the most expensive electricity is no electricity — not P15/kWh but available electricity, but rather P1/kWh electricity when there are no kilowatts available.

DOE’S COMPLAINT VS LEVISTE
On May 6, the DoE filed a criminal complaint against Congressman Leandro Legarda-Leviste and his solar firm, Solar Para sa Bayan Corp. (SPSB/SPBC), for failing to operate its national franchise, citing a seven-year period of total project inactivity.

DoE Secretary Sharon S. Garin personally lodged the complaint before the National Prosecution Service of the Department of Justice, saying that “To this date, no application whatsoever has been lodged by SPSB/SPBC, nor has any report been filed regarding its compliance with the terms and conditions of the franchise. Interestingly, when the legislative franchise was granted in 2019, SPSB/SPBC had no single project or operation to speak of.”

The DoE said it has no record that the company applied for the permits and approvals required by law, renewable energy projects were instead established and operated for profit through a separate group of companies under the umbrella of Solar Philippines Power Project Holdings, Inc. (SPPPHI), wholly owned by Mr. Leviste. See “Energy dep’t files complaint vs Leviste, firm over idle solar projects” (BusinessWorld, May 7).

The congressman should answer the DoE complaint and pay the P24-billion penalty for its failure to deliver its commitments to develop some 11,400 MW of solar farms under 42 Service Contracts (SCs) with the DoE from 2017-2022 and thus contribute to the finance department’s revenue collections. This instead of indulging in politicking irrelevant to energy development and avoiding paying the penalties.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an internationa fellow of the Tholos Foundation.

minimalgovernment@gmail.com