ICSC urges consumer safeguards in Marcos energy push

QUEZON CITY — The Institute for Climate and Sustainable Cities welcomed President Ferdinand Marcos Jr.’s push for renewable energy, storage systems and consumer protection but warned that new energy projects must undergo rigorous economic, environmental and safety reviews.

The climate and energy policy group issued the assessment on July 28, a day after Marcos delivered his fifth State of the Nation Address.

ICSC said the administration’s energy plans could improve reliability and reduce exposure to imported-fuel shocks, but their public value would depend on whether they lower electricity costs, protect consumers from inefficient charges and build resilience against climate-related disasters.

The group said energy security should not be measured solely by the addition of generating capacity.

It said the government must also examine how energy investments affect household bills, public transportation, grid stability, local communities and the country’s exposure to volatile global fuel markets.

“In this year’s SONA, President Marcos was firm: the welfare of Filipinos is his top priority, as it should be. Over the last year, the Philippines faced significant economic challenges, with the energy crisis directly impacting the costs of services, from transportation to electricity, even food. We appreciate the updates on the country’s immediate response the past few months, however, what our experience has taught us is that we must anchor our country’s development pathway to long-term economic resilience, and must do it urgently,” ICSC Executive Director Angelo Kairos dela Cruz said.

ICSC welcomed Marcos’ call to prioritize indigenous and renewable energy sources.

The group said the Philippine power sector remained dependent on imported fossil fuels and large, centralized baseload plants.

“We echo the President’s call to prioritize energy resources that are indigenous and renewable. The country’s power sector remains reliant on imported fossil fuels and on large, centralized baseload power plants. In turn, impacts of the US-Israel war on Iran has exposed the Philippines’ vulnerability to global disruptions and fuel price shocks. To transform our power system towards energy independence and resilience, accelerating the deployment of renewable energy (RE) sources, coupled with distributed power generation, is truly the no-regrets solution for the country,” dela Cruz said.

ICSC said a more distributed and flexible power system could limit the effects of geopolitical conflict and international price shocks on Filipino consumers.

It said renewable energy, battery storage and other flexible resources should be integrated into a modernized grid instead of relying mainly on large power plants connected to a centralized network.

“A Philippine grid that is distributed and flexible; powered by indigenous, renewable energy; and free from the impacts of global price shocks and geopolitical conflict strengthens our power system, generating benefits that translate across sectors, including public transportation. We welcome the government’s efforts to increase the adoption of electric vehicles, including their integration in our public transport fleet. But more importantly, these efforts must be matched with corresponding resources. If we will treat public transportation as a critical lifeline, it should be matched with commensurate funding – not just temporary fuel subsidies or short-lived contracting schemes that do not incentivize consistent service delivery. Instead, we should enable multi-modal public transportation that is affordable, interconnected, and dignified,” dela Cruz said.

ICSC said the expansion of electric vehicles and their inclusion in public transportation must be supported by sufficient and sustained funding.

It said temporary fuel subsidies and short-term contracting arrangements would not necessarily encourage consistent transport services.

The organization also supported Marcos’ call for the passage of the proposed Sariling Kuryente Act.

The measure is intended to simplify and widen access to rooftop solar and battery storage systems.

ICSC said the proposal should improve access to affordable financing, streamline permitting and grid-interconnection procedures across local governments and distribution utilities, and strengthen net-metering implementation.

A nationwide Pulse Asia survey released in July found that 93% of respondents believed rising electricity demand made affordable rooftop solar increasingly necessary.

The same survey found that 93% believed a wider transition was achievable with proper information, while 91% said widespread adoption was viable if affordable financing were available.

It also found that 85% viewed rooftop solar as a necessity rather than a luxury.

“The clarion call among Filipinos to make RE more accessible and affordable is also loud and clear, with a recent Pulse Asia survey noting that 9 out of 10 Filipinos believe that the government should make rooftop solar more affordable. We welcome the President’s call to prioritize the enactment of the Sariling Kuryente Act, with the aim of making rooftop solar and battery storage installations simpler and more accessible. We also laud the pronouncements to have systems loss charges removed from the electric bills of Filipinos. But in addition, we strongly urge to abolish the automatic fuel cost pass-through clause in power purchase agreements, which also allows fuel price volatility to be passed on to consumers. Last month, 48 distribution utilities (DU) across the country recorded residential electricity rates above the already-high national average, which show how differences in DUs’ power supply can influence electricity costs, further reinforcing the need for a distributed, flexible, and resilient power system in the Philippines,” dela Cruz said.

ICSC backed the President’s proposal to prevent consumers from paying system-loss charges arising from inefficiencies they did not cause.

The group said existing mechanisms under Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001, should be fully enforced before lawmakers create new regulatory structures.

More than two decades after the law’s enactment, ICSC said the Department of Energy and the Energy Regulatory Commission retained the authority and regulatory tools needed to promote affordability, accountability and consumer protection.

It said the immediate priority should be for the two agencies to fully exercise those mandates.

ICSC said Section 6 of the law originally sought to protect consumers by making sales of generated power zero-rated for value-added tax purposes.

It said subsequent amendments under Republic Act No. 9337, or the Expanded Value-Added Tax Law, shifted the tax burden back to electricity users.

The organization urged the administration and Congress to review the tax framework, particularly the 12% value-added tax passed on to consumers.

ICSC said Section 43 of the Electric Power Industry Reform Act authorizes the Energy Regulatory Commission to determine recoverable system-loss caps based on load density, sales mix, cost of service, delivery voltage and other technical considerations.

It said the regulator should ensure that consumers pay only for system losses considered efficient and necessary.

The group called for stronger regulatory oversight, greater market accountability and the preservation of market mechanisms that encourage efficiency, innovation and responsible private-sector participation.

It said distribution utilities and electric cooperatives must improve energy planning and system operations to reduce avoidable costs passed on to consumers.

ICSC also sought improvements to the procurement of power supply agreements through transparent and competitive processes.

It said the Competitive Selection Process should be reassessed and strengthened through benchmarking and other procurement mechanisms where appropriate.

The group said those reforms could improve price discovery, reinforce competition and help ensure that power supply agreements produce the most cost-effective outcomes for consumers.

ICSC also urged the government to reconsider automatic fuel cost pass-through provisions in power supply agreements.

It said costs resulting from fuel price fluctuations should not automatically be added to electricity rates.

The organization proposed that fuel cost adjustments undergo Energy Regulatory Commission review and validation supported by economic analysis.

It said this would ensure consumers paid only legitimate and prudent costs instead of automatically bearing the risk of fuel-price volatility.

ICSC recognized the administration’s increased use of digital tools and predictive technologies for disaster response.

It said technology should be accompanied by community training, adequate resources for local governments and protection for sectors exposed to climate- and disaster-related losses.

“We also recognize the government’s efforts to become more proactive in disaster response through the use of digital tools. Predictive technologies are crucial as we prepare for incoming calamities, but alongside that, communities must also be capacitated and trained to respond, local government units must be equipped with the proper resources, and protective measures must be put in place, especially for sectors that are heavily exposed to climate- and disaster-related impacts. The President recognized insurance as a protective measure for loss and damage in terms of agriculture and food production. Through the leadership of the Department of Finance (DOF), the Global Shield Against Climate Risks can help maximize climate- and disaster risk finance and insurance (CDRFI) opportunities in the country,” dela Cruz said.

The group said the Global Shield Against Climate Risks could help the Philippines expand climate- and disaster-risk finance and insurance, particularly for agriculture and food production.

ICSC expressed concern about the administration’s consideration of nuclear energy and native hydrogen.

It said each technology should be assessed according to cost, risk, efficiency, safety, infrastructure needs and contribution to energy security.

“This year’s SONA provided a glimpse of how the current administration views the country’s development pathway. While we have promising advancements in place, there were pronouncements made yesterday that are concerning. We welcome the government’s call to diversify our energy sources. However, while native hydrogen provides an opportunity to contribute to the Philippines’ energy transition, it is only secondary to the direct use of electricity generated from renewables. It needs to be further assessed based on its viability, efficiency, safety, and whether it can effectively contribute to the country’s energy security. Nuclear, on the other hand, does not fit our goal of a distributed system for the Philippines, that is powered by indigenous, renewable sources. Nuclear energy is more rigid than coal, utilizes imported fuel, and in addition, it ‘takes decades to deliver, requires massive capital, and carries complex safety, regulatory, and waste management burdens with long-term consequences,’” dela Cruz said.

ICSC said decisions on nuclear power should be based on a rigorous assessment before the government commits to capacity targets.

It said the review should distinguish between conventional nuclear plants and small modular reactors.

The organization said the review should cover the levelized cost of electricity, system-integration requirements, investment risks and possible effects on affordability, energy security and grid reliability.

ICSC described conventional nuclear plants as among the most capital-intensive generation technologies.

It said such projects require long development periods, major transmission expansion and additional ancillary services to maintain system reliability.

The group said conventional reactors were designed to operate as inflexible baseload facilities, making it harder for them to respond to variable electricity demand.

It said small modular reactors remained commercially unready, with uncertain costs and limited deployment experience worldwide.

ICSC said nuclear power would also require imported uranium fuel, exposing the country to global prices, supply-chain disruptions and geopolitical risks.

The organization said hydrogen could have a role in sectors where direct electrification remained difficult.

It said hydrogen deployment should depend on economic viability, infrastructure readiness, energy efficiency, and measurable climate and energy-security benefits.

ICSC also urged the government to distinguish indigenous gas resources from imported liquefied natural gas when assessing the future role of natural gas.

It said the country should maximize indigenous gas from Malampaya for as long as technically and economically feasible.

The group cautioned against unnecessary dependence on imported liquefied natural gas because international price volatility and supply disruptions could be passed on to consumers.

ICSC also urged the administration to prioritize compliance with the country’s ecological solid-waste management framework before approving waste-to-energy initiatives.

“Addressing energy security must also ensure that new energy pathways are consistent with environmental safeguards and long-term sustainability. The country must prioritize its ecological solid waste management framework before even considering waste-to-energy (WTE) initiatives, as the President noted. More than two decades since the enactment of Republic Act 9003, major gaps remain in waste segregation, materials recovery, recycling, and composting. Addressing these implementation gaps should remain the priority before pursuing disposal-based technologies,” dela Cruz said.

Republic Act No. 9003, or the Ecological Solid Waste Management Act, establishes a hierarchy that prioritizes waste reduction, segregation, reuse, recycling, recovery and composting.

ICSC said implementation remained persistently weak across local government units more than two decades after the law was enacted.

It said waste-to-energy projects should not displace the priorities established by Republic Act No. 9003 and the Extended Producer Responsibility Act.

The group warned that expanding waste-to-energy systems primarily dependent on combustion or incineration could address the symptoms of weak waste governance without resolving its causes.

It said accurate measurements and transparent monitoring were needed to ensure that only genuine residual waste that could no longer be reduced, reused, recycled or composted would be considered for treatment.

ICSC also raised concerns about the proposed Pax Silica Industrial Hub and its effect on electricity demand.

The group said the hub would require power equivalent to about 19% of Luzon’s peak demand.

“While the President noted that the establishment of the Pax Silica Industrial Hub will ‘bring quality jobs, accelerate industrial competitiveness, and revitalize the economy,’ we cannot deny the concerns that it poses. The Hub’s energy demand will require approximately 19% of Luzon’s peak demand, and Department of Energy (DOE) Secretary Sharon Garin expressed that plugging its full demand to the Luzon grid is too dangerous, risking the grid’s stability. This is in addition to the environmental, social, and systemic issues that also need to be thoroughly evaluated,” dela Cruz said.

The Department of Energy has said it is studying options for supplying the industrial hub while protecting consumers outside the development and avoiding risks to the Luzon grid.

ICSC said major industrial projects should undergo comprehensive examination of their environmental, social and power-system effects.

It said renewable energy expansion must be accompanied by investments in transmission, storage and distributed systems that give consumers greater control over electricity costs.

The group said the Philippines could not depend solely on a centralized grid designed around large power plants.

It said a distributed and flexible system could improve resilience, lower imported-fuel dependence and better accommodate variable renewable-energy resources.

“As the national government defines the pathway towards economic development for the country, in the face of an energy crisis driven by global disruptions, we have to be reminded constantly that ultimately, climate action and resilience must be the main development priority for the Philippines. It must be systemically integrated in long-term planning and resource allocation, with local governments at the helm of implementation. None of these advancements would matter if they result in environmental and social harm – climate, energy, biodiversity, and sustainable development must always be interconnected,” dela Cruz said.

ICSC said climate action and resilience should be systematically integrated into long-term government planning and resource allocation.

It said local governments must lead implementation because communities bear many of the direct effects of energy projects and climate-related disasters.

“Genuine climate action puts people and communities at the center. Indeed, the welfare of Filipinos must and always be the top priority of the national government. We are hopeful that the pronouncements made by the President are aimed at driving sustainable economic development for the country, but we must also keep in mind that local communities always have to be part of the equation. Climate action is and will always be the path to better development, let us not lose sight of this,” dela Cruz said.