Energy Secretary Raphael P.M. Lotilla welcomes the investment by the Maharlika Investment Corporation in the National Grid Corporation of the Philippines (NGCP). “This is a step towards attaining our goal of ensuring security of supply, reliability, affordability, and promoting competition in the power sector,” he said.
Government investment in transmission is anchored on the Philippine Development Plan (PDP) 2023-2028 approved by President Ferdinand Marcos Jr. which states that the Government “should revisit and reevaluate financing investment in transmission.” The PDP recognizes that, “Investment in transmission expansion offers enormous potential benefits for efficiency by increasing access to low-cost generation, improving reliability, and counterbalancing market power.” (p. 280, PDP)
Transmission lines are vital to the power sector. New generation projects rely on transmission wires to deliver electricity to customers. The NGCP, as the country’s single biggest monopoly in the power sector, is responsible for the construction of those high- voltage wires and facilities, and the operation of the national grid system. The NGCP’s Transmission Development Plan indicates when transmission wires and substations will be operational and where. If these transmission facilities are delayed or their completion dates keep on moving, new generation plants will also be delayed, or they will be left stranded or unused even if ready to operate.
Given that 98% of NGCP projects completed between 2016 and 2024 were delayed, with some delays exceeding 9 years, Maharlika’s investment can help avoid such delays. Government investment in transmission would make additional capital available for NGCP to deploy in the pursuit of completing transmission projects on time.
Delays can inconvenience the public and cause significant damage to the economy. For example, in April 2023, Panay experienced an island-wide blackout and the NGCP gave assurance that this would not happen again because of the imminent completion of both the Mindanao-Visayas Interconnection Project and the Cebu-Negros-Panay 3 Project before the end of 2023. However, in January 2024, another island-wide blackout occurred in Panay as both the abovementioned projects remained unfinished.
Delays in completion of transmission projects not only increase the risk of power outages but also drive up electricity prices. The Independent Electricity Market Operator of the Philippines cited examples from just four key transmission projects which show large potentials for power price reductions had these been completed earlier.
For instance, had the Cebu-Negros-Panay 3 Project been completed earlier, electricity rates could have been reduced by PHP 1.27/kWh in Cebu, PHP 2.03/kWh in Negros, and PHP 1.74/kWh in Panay. In addition, if the Mindanao-Visayas Interconnection Project, which was delayed for 28 months, had been completed earlier, a reduction of PHP 1.99/kWh in Luzon, PHP 1.77/kWh in Visayas, and PHP 1.30/kWh in Mindanao could have been experienced by consumers. Although these projects’ timelines were affected by the COVID-19 Pandemic, these were not completed until well into 2024.
Similar conclusions could be drawn from other delayed projects. The timely completion of the Mariveles-Hermosa and Hermosa-San Jose 500 kV Transmission Lines would have reduced rates by PHP 1.47/kWh in Luzon. As for the Cebu-Bohol 230 kV Project, timely completion would have resulted in a PHP 1.24/kWh reduction for Bohol consumers.
The government’s investment in transmission is short of the United Kingdom’s (UK) decision to renationalize its transmission system operator last year. It will be recalled that the UK renationalized the British power system operator in September 2024 to support energy security, help keep bills down, and facilitate the entry of more renewable energy projects.
With two board seats each in NGCP and Synergy Grid & Development Philippines Inc., Maharlika can pave the way for better coordination between the DOE and the NGCP to help expand transmission connections in a timely manner and speed up the interconnection of our power grid across the archipelago. ###