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In recent months, many Filipinos have been hit by electricity bill shock, a term used to describe unexpectedly high power bills that leave households scrambling to adjust their expenses. A key driver is the US-Iran conflict, which has disrupted global energy supply chains and rapidly fed through to higher electricity costs.
Although Meralco and other private distribution utilities (DUs) remain frequent targets of criticism over rising electricity costs, BusinessWorld columnist Bienvenido Oplas maintained that these attacks are rooted in emotion and political posturing rather than reasoned thinking.
“There was no increase in the distribution charge, and the supply and metering charge that went directly to Meralco and other DUs (distribution utilities,” he pointed out. “There was also a refund for some customers, the Actual Weighted Average Tariff (AWAT) in 2025-2026, previously called “true up” in 2022-2023.”
The Energy Regulatory Commission (ERC) also clarified that it sets the distribution charge, which covers the cost of delivering electricity from the grid to households through local utilities. This rate is reviewed and approved through its regulatory process.
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Breaking Down the Causes of High Electricity Prices in the PH
Filipino households face some of the highest electricity costs in Asia, with average residential rates at around $0.207 per kilowatt-hour (kWh), placing the Philippines fourth in the region behind Cyprus, Singapore, and Japan. One key factor for the high electricity prices, explained former Energy Regulatory Commission Monalisa Dimalanta, is the lack of government subsidy.
“Unlike our neighbors, our power prices in the Philippines are not subsidized,” she noted. “There is no subsidy from the government, and all the entirety of the burden, the entirety of paying for the power prices, is on the shoulders of consumers.”
Meanwhile, the ERC said the bill shock experienced by Filipino consumers stems from “multiple overlapping forces, none of which can be resolved by any single agency acting alone.”
Against this backdrop, this article examines the various factors driving recent increases in electricity costs.
Increased generation costs
According to the Meralco website, the generation charge makes up the largest share (around 50 to 55%) of the electricity bill, covering the cost of power purchased from suppliers such as independent power producers, contracted power suppliers under power supply agreements, the Wholesale Electricity Spot Market (WESM), and exported energy from net metering and distributed energy resource participants.
“The rise in overall electricity prices in the latest billing period came from the generation charge, which increased from P7.67 per kilowatt-hour (kWh) in May 2023 to P8.79/kWh in May 2026,” highlighted Oplas.
Kritz added that bill shocks are almost always driven by spikes in generation charges, which in turn are typically caused by three factors: higher global fuel prices, a weaker peso, or seasonal increases in demand during the hot months.
“When a conflict disrupts LNG supplies from the Middle East, or when a cold winter in Europe drives coal demand, the price that Philippine power plants pay for their fuel rises — and that rise is passed through to the generation charge in the next billing cycle,” he wrote. “The passthrough is contractually mandated and, in a market without subsidies, unavoidable.”
Additionally, the ERC attributed high generation costs to factors such as the country’s geography, limited energy resources, past policy decisions, and relatively high financing costs.
On geography, Kritz noted that the Philippines effectively operates three largely separate power grids in Luzon, the Visayas, and Mindanao. Because each grid must largely meet its own demand, and power supply has not kept pace with growing consumption, electricity prices tend to be higher.
Global market pressures on local energy supplies
While the Philippines relies heavily on imported coal, liquefied natural gas (LNG), and oil, making electricity prices vulnerable to global fuel prices and exchange rate movements, even locally produced natural gas is not immune to these market pressures.
According to Oplas, the largest price increases from May 2025 to May 2026 came from gas plants using indigenous Malampaya gas, namely First Gas Corporation and FGP Corporation, which saw increases of about ₱2 per kilowatt-hour (kWh). This was followed by gas plants running on imported liquefied natural gas, such as South Premiere Power Corporation (SPPC) and Excellent Energy Resources Inc. (EERI).
“People think that indigenous gas should remain cheap. No, that is not the case. Malampaya gas prices are pegged on Dubai crude oil prices, and are priced in US$, not Pesos,” wrote Oplas.
Kritz further explained that this is linked to the deregulation of the oil industry, where domestic LNG and other imported fuels are priced based on global markets in US dollars. As a result, fuel costs are also exposed to exchange rate movements, meaning a weaker peso can push up prices even if global fuel prices remain unchanged.
Meanwhile, coal plants such as the Masinloc Power Plant, GNPower Dinginin, and the Mariveles Power Plant continue to provide relatively lower-cost electricity, with prices estimated at roughly half those of gas-fired plants.
Higher transmission charges
Transmission, which makes up about 10% of the electricity bill, rose from ₱0.79 per kWh in May 2025 to ₱1.41 per kWh in May 2026. This increase was driven by the need for the National Grid Corporation of the Philippines (NGCP) to procure more ancillary services (AS).
AS are support services that help keep the power grid stable and reliable, such as maintaining the balance between electricity supply and demand, and ensuring frequency and voltage stability. These are procured by the NGCP to prevent disruptions or blackouts.
Oplas pointed to intermittent solar and wind power producers without battery storage, noting that their variability increases pressure on the NGCP to procure additional AS to maintain grid stability.
As more intermittent renewable energy (RE) sources are integrated into the grid, coal and gas plants are increasingly required to ramp up and down to balance supply and demand, as variable renewables are given priority dispatch. This leads to higher system costs due to lower efficiency, higher fuel use, and increased physical stress on plant equipment such as turbines, boilers, and generators, as well as greater reliance on backup services to maintain grid stability.
Green energy costs
The May 2026 bill also saw a slight increase in the Feed-in Tariff Allowance (FIT-All), which supports earlier RE projects by providing them with guaranteed fixed payments for the electricity they generate.
Another RE-related charge is the GEA-All (Green Energy Auction Allowance), which helps fund new RE projects under the government’s auction program.
In response to rising electricity prices in 2026, the ERC said it temporarily suspended GEA-All collections in May and June 2026, using the fund’s healthy balance to provide direct relief on consumers’ electricity bills.
Kritz said the measure only provided “minor relief” and also questioned the GEA-All, citing Manila Bulletin columnist Myrna Velasco, who noted that it has no clear legal basis and was introduced by the Department of Energy (DOE) as part of its push for RE development.
“The ERC cannot do away with the FIT-All, because it is authorized by Republic Act 9513, or the Renewable Energy Act of 2008, although it can modify the rate to some extent and even temporarily suspend collection of it for a good reason, as was done for a period of time during the Covid-19 pandemic,” he wrote.
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Balancing Clean Power and Affordability
While RE remains a central pillar of the Philippines’ long-term energy strategy, experts and industry leaders caution that its rapid expansion comes with system-wide costs that are not always immediately visible in electricity bills.
Manny V. Rubio, President and CEO of Meralco PowerGen Corporation (MGEN), underscored the need for balance in managing the transition. “We believe in a diversified portfolio that delivers reliability, affordability, and sustainability. A successful energy transition requires balance — renewables must be complemented by dependable baseload generation and emerging storage technologies that ensure grid stability,” he said.
A similar point was raised by Rappler columnist Den Somera, who noted that intermittent RE can strain the grid during periods of high demand or supply volatility. “In a state of emergency, the intermittent nature of renewables becomes a liability. High-efficiency coal plants provide a stable, 24/7 supply of electricity that prevents the widespread rolling blackouts that would otherwise devastate the economy,” he said. He added that extending the life of existing coal facilities and allowing planned expansions should be seen as a “no-regrets” strategy while RE and storage systems continue to mature.
RE can eventually help lower electricity costs as technologies scale up and become more efficient. However, this long-term benefit depends on significant investments in grid modernization, battery storage, and ancillary services to manage variability and ensure stability.
For now, the challenge lies in timing and system readiness. Variable renewables such as solar and wind cannot yet provide dispatchable power at scale, making them dependent on backup capacity and grid support systems that add to near-term costs. Without these investments in place, the transition risks adding further pressure on electricity prices rather than easing them.
Ultimately, a pragmatic and balanced approach is needed to avoid further bill shocks, ensuring that the shift toward cleaner energy does not come at the expense of reliability and affordability for consumers.
Sources:
https://www.manilatimes.net/2026/06/08/supplements/why-is-my-electricity-bill-so-high/2360142
https://www.youtube.com/watch?v=jL29vyjJcDc
https://newsinfo.inquirer.net/2220119/explainer-whats-driving-the-latest-spike-in-electricity-prices
https://www.meralco.com.ph/residential/billing-payment/understanding-your-bill/breakdown-charges
https://www.rappler.com/business/opinion-recalibrate-philippines-energy-program