The law of power supply and demand

By Herbert Vego

WE all have heard of the law of supply and demand as an economic principle implying that the price of a product or service is determined by its availability and the public’s desire for it. Where there is a sudden shortage, demand rises along with its price.

That is where we are situated in relation to the high cost of electricity, as shown in our bill for the current month of June. Where does the fault lie?

As far as the National Grid Corp. of the Philippines (NGCP) is concerned, it seems to say, “Oh, no, not here!”

The NGCP is a private corporation tasked with operating, maintaining, and developing the country’s state-owned power grid. It has the crucial role of linking power generators and distribution utilities to deliver electricity where it is most needed.

According to an NGCP press release, it has cut down its power transmission rates by 9.33% — from PHP 1.5983 per kilowatt-hour (kWh) to PHP 1.4492 as of the last billing period.

As far as we power consumers in Iloilo are concerned, we are tempted to blame our distribution utility (DU), MORE Electric and Power Corp. (MORE Power), because it’s where the bill comes from. The truth of the matter, however, is that it gets only around 10% of the amount it collects.

As reported by Raphael Dorilag, energy sourcing manager of MORE Power, the company itself has not increased its distribution charge.

The latest bill statement we residential consumers are bound to pay for this month of June, however, is PHP 13.87 per kilowatt-hour (kWh), or PHP 2 higher than the previous month’s.

The largest portion of this bill, more or less 55%, covers the generation cost charged by the various power plants. The rest includes the transmission, distribution, and system-loss charges, as well as government taxes.

MORE Power and other DUs do not generate power. They purchase it from various power plants, from where electricity flows through the main lines of the NGCP, onward to those of the DUs, ending up in the homes and establishments of consumers.

To reiterate, the price hike is a consequence of the unusually low power supply passing through the Visayas grid. In other words, our power plants do not produce enough electricity to fill the higher demand this hot-weather month. They can only generate so much without conking out.

As reported by the NGCP, three coal-fired power plants could not maximize their productivity for whatever reasons. They are two units of Aboitiz Power Therma Visayas Inc., with a capacity of 169 megawatts (MW) each, and a unit of Panay Energy Development Corp. (PEDC) with a capacity of 150 MW.

As of June 23, 16 power plants had implemented forced outages, while 14 others had derated their operational capability.

Recurring power interruptions in Iloilo City this month of June are unusually frequent. From June 2 to June 19, 2026, MORE Power recorded at least seven advisories for manual load dropping (MLD) in compliance with an NGCP directive.

That sad reality compels the NGCP to flash either a “yellow alert” or “red alert” as a signal for MORE Power and the Iloilo Electric Cooperative (ILECO), among other DUs, to respond.

A “yellow alert” means that while supply is still enough to meet current demand, it has fallen below the required safety margin.

A “red alert” indicates a depleted reserve electricity supply, hence insufficient to meet customers’ demand.

In both cases, the NGCP requires the DUs to implement manual load dropping, or rotation of power interruptions, better known as “brownouts,” to prevent a total grid collapse.

Oh well, brownouts are better than blackouts.