Mabuhay Energy CEO: Retail Choice Can’t Override Grid Bottlenecks

Twenty-five years after the passage of the Electric Power Industry Reform Act of 2001 (EPIRA), the law’s legacy remains a double-edged sword. On one hand, EPIRA successfully unburdened the national government from massive power infrastructure debts while expanding electricity access to over 90 percent of the nation. On the other hand, Filipinos still shoulder some of the highest electricity tariffs in Southeast Asia—a stark reminder that structural market reform means little without physical infrastructure and proactive regulation to back it up.

This critical gap between consumer expectations and physical grid constraints took center stage at a recent Energy Roundtable hosted by The Manila Times at Space World Plaza in Bonifacio Global City.

Addressing a high-level audience—including Energy Regulatory Commission Chairman Francis Saturnino Juan along with senior executives from Meralco, MORE Power, PHILRECA, Alternenergy, PEMC, and PARE—Jacqueline Castillo, President and CEO of Mabuhay Energy Corporation, delivered a grounded reality check on the limits of market competition.

"A Retail Electricity Supplier cannot give a customer affordable electricity if affordable generation is unavailable," Castillo emphasized. "And affordable generation somewhere in the country does not help the customer if transmission cannot bring that electricity to where it is needed."

Castillo pointed to persistent price divergences across Luzon, Visayas, and Mindanao as clear evidence of grid congestion dragging down market efficiency. While EPIRA introduced mechanisms for end-users to select their suppliers, retail choice alone cannot bypass physical shortages or stranded capacity caused by a severe timeline mismatch: private developers can erect solar or wind farms in under 12 months, whereas transmission projects stall for years under regulatory and bureaucratic hurdles.

To bridge this divide, Castillo argued that transmission development must shift from a simple regulated investment program into an enforceable obligation. When regulators evaluate major grid projects, capital expenditure should be weighed directly against consumer savings—calculating transmission costs against avoided grid congestion, lower spot market prices, unlocked renewable energy, and reduced curtailment.

Crucially, preserving competitive generation requires distinguishing deregulation from a total absence of regulation. While generation must remain open, market power, plant outage behavior, bidding conduct, and cross-ownership require far more aggressive monitoring. While a ₱15/kWh Wholesale Electricity Spot Market (WESM) price spike might reflect real-time conditions during grid stress, Castillo noted it does not represent an efficient long-run cost if timely transmission investments or vigilant oversight could have prevented the bottleneck entirely.

Finally, Castillo highlighted a structural void in the market's current architecture, which relies almost exclusively on long-term bilateral contracts and real-time spot trading. Filling this "missing middle" with standardized financial hedging tools—allowing retailers and large consumers to lock in rates three, six, or 12 months ahead—would drastically cut the risk premiums currently baked into electricity bills.

The forum ultimately underscored an industry-wide consensus: meaningful consumer choice must be anchored by physical transmission capacity, vigilant regulatory oversight, and modern financial tools. As the Philippines navigates the next chapter of power reform, the true test will not be writing new policy on paper, but fixing the physical and regulatory bottlenecks that keep affordable power out of reach for Filipino households and businesses.