Will Maharlika Fund’s grid investment lower your electricity bills?
MANILA, Philippines — A year and a half since its creation under law, the Maharlika Investment Fund (MIF) has made its first investment since its creation, acquiring a 20% stake in the National Grid Corporation of the Philippines (NGCP).
While the government is optimistic that this move will help lower electricity costs, questions remain about when and how consumers will feel the impact.
What does the government say? Energy Secretary Raphael Lotilla acknowledged that it is too early to determine the exact timeline or amount by which electricity bills might decrease.
“We can’t give you any exact date and exact amount of reduction,” Lotilla said.
He pointed out, however, that better transmission infrastructure could indirectly lower costs. For instance, the recent Mindanao-Visayas Interconnection reduced spot market prices by up to ?2 in Luzon, ?1.77 in Visayas, and ?1.30 in Mindanao.
But Lotilla clarified that these reductions do not directly translate into lower consumer bills because electric cooperatives source only a portion of their energy from the spot market.
The spot market is volatile, leading energy firms to strike up power supply agreements with generation companies.This is where the generation charge in your bill comes from.
Understanding transmission and generation costs. Electricity bills are influenced by several factors, including generation charges, which have been a major driver of rising costs. Transmission costs, meanwhile, account for about 3.1% of electricity expenses, according to Maharlika Investment Corp. (MIC) president Rafael Consing Jr.
Lotilla explained that NGCP’s high-voltage transmission lines are critical for connecting power plants to consumers. Without these lines, power plants cannot deliver electricity to the grid effectively.
“The generation plant cannot contribute or supply power to its customers unless they are connecting lines from the generation plant to the customers. And that’s where the transmission lines—the high voltage transmission lines of NGCP—are very important, because without these lines we cannot provide the power,” Lotilla said.
Potential impact of the NGCP investment
Consing also explained that investing in NGCP could improve the rollout of transmission grid infrastructure, allowing more power players to supply energy to the grid. This increased competition could eventually lower electricity prices.
“As you’ve got more supply coming in… at some point in time, [prices] will come down,” Consing said.
The government also aims to achieve 35% renewable energy in its power mix by 2030 and 50% by 2040. Consing expressed hope that supporting NGCP’s infrastructure development would facilitate this transition, potentially reducing costs in the long term.
Uncertainty remains. While officials remain optimistic about the benefits of the NGCP investment, they caution that its impact on electricity bills will depend on multiple factors:
- The location of consumers.
- Existing supply agreements with distribution utilities.
- The pace at which transmission projects are completed.
“It depends on where you are, what are the supply agreements that your distribution utility has entered into and so on,” Lotilla said.
So what can consumers expect?
The Maharlika Fund’s investment in NGCP is seen as a step toward improving energy infrastructure and fostering competition in the power sector. However, its direct impact on consumer electricity bills remains uncertain for now.
The government is optimistic but has yet to provide concrete timelines or figures for potential cost reductions.
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