Last of two parts
By Laurence R. Rogero
THE third is competition. The Electric Power Industry Reform Act (Epira) unbundled generation and the Wholesale Electricity Spot Market, or WESM, gave rivalry a venue, but liberalization is not competition, and a market is not a level one. Generation has concentrated in a few large groups, several integrated across generation and distribution — the same names on both sides of the meter. Where supply margins are thin, the more profitable strategy during tight conditions can be to let prices rise, and a spot market faithfully prices scarcity whether it is accidental or engineered. The design compounds the structure: most electricity moves through bilateral contracts negotiated outside the spot market, so the transparent venue governs only the residual — yet it is the residual that sets the marginal price everyone feels. Retail competition, meant to hand discipline to consumers, was opened only to the largest users and stalled short of households. And because Epira built an energy market but never a true capacity or reserve market, the system rewards scarcity, not availability. Competition was introduced; contestability was not secured. The distinction is technical, but the electricity bill is where it is paid.
The fourth cuts closest to the promise of lower prices. The reform was conceived partly as a transparency project: Subsidies would be minimized and, in all cases, made explicit — visible in the budget, open to scrutiny. Two and a half decades on, new layers of indirect support have emerged, embedded in universal charges, taxes and cross-subsidies that only the most ardent expert can decipher. Because government provides no independent funding, these costs are charged back to the consuming public, on top of the taxes collected through the distribution utility. The instruments have changed; the opacity has not. When subsidies are opaque, they cannot be debated; when they cannot be debated, they cannot be reformed.
One segment belongs in a category of its own, because it is the one Epira never meant to make competitive. A grid is a natural monopoly, and the reform’s answer was not competition but concession — public ownership of the assets, private operation under a long franchise and a regulated return. The test of such a concession is not its profitability but its build-out. The regulator’s last comprehensive audit told an uneven story: As of early 2023, only six of 16 transmission projects of national significance had been completed, the rest running on average about three years behind schedule. The Mindanao-Visayas Interconnection, meant to weld the island grids into one, was first set for 2020 but reached full commercial operation only in 2024. The operator blames right-of-way, permitting and the pandemic — constraints partly genuine and partly the very risks a concessionaire is paid to bear. Where critical lines run years late, the cost is paid twice: generation that cannot reach its load, and a reliability margin thinner than planned. That thinness is no longer abstract: In early 2026 a surge in the grid operator’s ancillary-service charges — the cost of holding reserves on standby — drove transmission rates sharply higher, a fresh sign the backbone is being asked to carry more than it was built to bear.
None of this means Epira was a mistake. The reform answered structural failures the old system could no longer sustain, and it has been, on balance, more successful than not. The lesson is that markets require institutional complements that do not emerge automatically from privatization — and that those complements must be built in coordination, not in sequence. A market without its supporting institutions is a highway without traffic rules: The infrastructure exists, but the system does not perform as promised.
Gaps remain. Regulatory independence must be real, not merely statutory — longer fixed terms, transparent appointments, adequate technical staffing; referees who can be removed mid-game do not command credibility. A formal reserve-capacity framework is overdue. The transmission concession needs enforceable build-out milestones and delay penalties with teeth, so that the operator’s return tracks delivery, not mere possession of the franchise. And the subsidy tangle demands a comprehensive audit — an explicit choice about which supports to keep, which to remove, and which to make visible, targeted and accountable. These are not four problems but one: completing the coordinated build-out Epira’s big push assumed but did not secure. They are load-bearing walls. Remove one and the others lean.
And the imperative does not stop at the sector’s edge. Because fuel costs are structurally embedded in electricity prices, the conversation must reach energy-mix policy, the pace of the renewable transition, and the development of indigenous fuel that decades of inertia have left underexplored. Epira’s promise was never self-executing. A market was built; its institutions were not; and the gap between the two is what every household has been paying for. The reform’s second quarter-century will be judged less by what it started than by what it finally finishes.
Lawyer Laurence R. Rogero has over 30 years’ experience advising international and local project sponsors, private and multilateral lenders, and government agencies on power and infrastructure projects. He lectures at Ateneo de Manila University and is pursuing graduate studies in Economics. He earned his LL.M. (with distinction) from Georgetown University as a Fulbright scholar, and holds BS Business Economics (magna cum laude) and Juris Doctor (Academic Excellence Medal) degrees from the University of the Philippines Diliman. His research focuses on law and economics, energy regulation, taxation, international investment, project finance.