2016 Theses Master's

Energy Pricing in the Philippines and its Effect on Economic Growth

Uy, Frances Irene

This study explores why energy prices in the Philippines are high. A comparison of the components of energy cost among selected cities in Asia reveals that Manila has the third highest generation cost, highest grid cost and the third highest value added tax imposed on energy. An examination of a residential bill in Manila further reveals an energy cost component unique to the Philippines. At least 15 percent of a residential electric bill comprises of miscellaneous charges that represent subsidies for the elderly and marginalized end-consumers, rural electrification, subsidies to incentivize development of renewable energy and the cost of debt incurred by the government in the past. The history of the energy industry in the Philippines reveals that loose implementation policies especially at the local level, external economic factors such as currency depreciation and increase in interest rates and oil prices, ineffective demand projections and poor pipeline planning as well as political influences led to the massive debt incurred by the government. Due to the governmentUs fiscal constraints, the industry was privatized. Pricing is regulated by the Energy Regulatory Commission but oligopolies and conflicts of interest in the industry, as well as the current pricing mechanisms suppress demand and impede the reduction of energy prices. Absence of public participation leaves the general public at a disadvantage because the burden of paying for miscellaneous energy costs falls on them.