Philippines plans power market regulation as LNG costs rise
Manila plans to regulate electricity prices next week to counter surging LNG costs. Officials will boost coal output to prevent a projected 16% price hike.
The Philippines is preparing to implement emergency measures to regulate its electricity market as surging prices for liquefied natural gas (LNG) threaten to drive up domestic utility bills. Energy Secretary Sharon Garin announced that the government may intervene as early as next week to mitigate a projected 16% rise in power prices. This volatility stems from significant disruptions in Middle East shipping routes, particularly through the Strait of Hormuz, exacerbated by the escalating conflict involving the United States, Israel, and Iran.
Global LNG supply has tightened significantly following a production halt by Qatar, which accounts for approximately 20% of the world's supply. Consequently, spot prices for the fuel have more than doubled, reaching their highest levels since 2022. To counter these costs, Manila plans to reduce its reliance on LNG-fired power plants by increasing the output from coal-fired facilities and renewable energy sources.
"The basic idea is to ramp down liquefied natural gas and ramp up coal and renewables."
To ensure a stable fuel supply for this transition, the government is in discussions with Indonesia to secure consistent coal imports. While global suppliers like Warrior Met Coal, Inc. play a role in the broader metallurgical and energy coal markets, the Philippines is focusing on regional partnerships to maintain its grid. The move marks a pivot for the nation, which saw its first annual decline in coal-fired output in nearly two decades last year.
"We are asking for emergency powers in order to regulate the market."
The planned intervention is a rare move for the Philippine power sector, which remains one of the few largely unregulated markets in Asia. Currently, electricity tariffs in the country are the second highest in the region, trailing only Singapore. Garin noted that the government is looking to suspend certain market rules to provide temporary relief to consumers facing a rising cost of living.
"Because the cost of living will increase, we are trying to do some temporary relief."
The Manila Electric Company, known as Meralco, has indicated its support for the Department of Energy's initiatives. The utility provider confirmed it has sufficient coal contracts and is working with suppliers to stabilize generation charges. Additionally, the government is exploring the reallocation of unused domestic gas from First Gas Power to support plants that are currently dependent on expensive imported LNG.
