Think tank: Grid stress could cost W. Visayas up to PHP 85 billion

By Francis Allan L. Angelo

Recurring grid alerts and manual load dropping in the Visayas are no longer just technical advisories but economic warning signals that are already suppressing investment in Western Visayas, the Institute of Contemporary Economics (ICE) said at the Visayas Power Forum in Bacolod City on July 13, 2026.

In a presentation, “Power Reliability and the Visayas Economy,” ICE Executive Director Joseph Ladrido said the issue is not only whether the Visayas has enough megawatts, but whether the power system can reliably and affordably carry growth.

Ladrido framed the question through three economic lenses: reliability, or whether the system can carry demand under stress; affordability, or whether supply and deliverability constraints are adding cost pressure; and confidence, or whether recurring alerts are weakening investment and expansion decisions.

ICE said a grid alert signals that the power system has reduced room for error, forcing businesses, households and public services to operate under higher uncertainty. The cost, it said, begins before the lights go out.

Grid stress reaches Iloilo consumers

Ladrido cited the July 8 incident in which grid stress reached Iloilo consumers. A Yellow Alert was raised from 1 p.m. to 3 p.m., followed by the tripping of the Iloilo–PEDC 138 kV Line 3 and the isolation of PEDC Unit 3 at 1:32 p.m.

The PCPC plant shut down at 2:06 p.m., and a Red Alert began at 3 p.m. Manual load dropping (MLD) reached La Paz Feeders 3, 1 and 4 from 3:42 p.m. onward, with all affected MORE feeders restored by 7:13 p.m.

Ladrido said the event showed grid stress becoming consumer impact, moving through generation, transmission, reserves, grid operations and local feeder curtailment. It noted that MORE’s disclosed MLD sequence was time-bounded and restored within or below the announced window, but said the accountability question is why the Visayas Grid reached emergency load-reduction conditions.

MLD, the institute explained, is a controlled reduction of demand ordered by the grid operator to protect system stability when supply, reserves or deliverability are insufficient. Consumers experience the interruption locally, but the trigger sits upstream — the feeder is where consumers feel the event, while the system is where the cause must be examined.

The ICE analyst also pointed to the June 10 Red Alert, when the Visayas Grid had only 8 megawatts (MW) of apparent margin – 2,429 MW of available capacity against a projected peak demand of 2,421 MW. For a grid serving more than 2,400 MW, it said, that is not a meaningful reserve cushion, as a small deration, forecast error, transmission constraint or loss of support can erase the margin.

Investment signal already flashing

Ladrido said the economic damage may already be visible in investment behavior. Citing Philippine Statistics Authority data on Western Visayas gross regional domestic expenditure at constant 2018 prices, ICE said regional output still grew 6.4 percent in 2025, from PHP 642.5 billion to PHP 683.4 billion.

Gross capital formation, however, fell 11.4 percent, from PHP 86.8 billion to PHP 76.9 billion — a PHP 9.9 billion decline. Inventories swung from accumulation to a PHP 9.2 billion drawdown, fixed capital slipped 1.0 percent, and construction contracted 1.4 percent.

Ladrido said the pattern is not proof by itself but is consistent with investment hesitation after reliability shocks, suggesting grid stress may already be suppressing value creation before the next outage event happens.

The institute estimated a typical regional interruption event costs about PHP 41 million in immediate disruption, or PHP 410 million if 10 similar events occur in a stress month, while a typical MLD event places about PHP 12.7 million in output at risk.

Combined with the PHP 9.94 billion drop in capital formation and PHP 19.9 billion to PHP 33.1 billion in five-year output capacity not created from missing investment cohorts, ICE placed the five-year economic value not created under a Western Visayas reliability-stress scenario at PHP 72 billion to PHP 85 billion in constant 2018 pesos.

The cost of unreliable power, it said, is not only power not served but the regional growth path that fails to materialize.

Completing EPIRA’s unfinished task

Ladrido traced the recurrence of grid stress to a loop: thin margins lead to system stress, which triggers alerts and MLD, imposing economic cost and delaying investment — so the next demand peak begins with the same thin margin. Weak system integration keeps the loop from breaking, it said, as planning, reserves, generation, transmission, regulation and accountability are not moving fast enough as one reliability discipline.

The group said the Electric Power Industry Reform Act (EPIRA) opened the sector to private capital, separated generation, transmission, distribution, supply, market operation and regulation, and created market and regulatory disciplines – but its unfinished task is binding coordination.

It said the Department of Energy (DOE) is already placed at the center of planning, integration, reliability and reserve adequacy, but recurring Yellow and Red Alerts and MLD show this role must become more binding, more transparent and more capable of forcing coordination across the power chain. EPIRA does not need reversal, ICE said; it needs a stronger system integrator.

The institute also cautioned against sector-level claims of readiness, citing the National Grid Corporation of the Philippines’ (NGCP) statement that the country has 10,260 MW of available transmission capacity but not enough power plants in the right places.

Such claims, it said, must be tested against actual deliverability under peak demand, plant outages, congestion, inter-island constraints and grid alert or MLD conditions.

Panay as the case study

ICE said the Visayas is especially exposed because reliability depends on a chain of island-to-island delivery, where a weak link can convert regional adequacy into local curtailment risk.

Panay, it said, illustrates how geography becomes economic risk: the island sits at the western edge of the Visayas grid and depends on reliable inter-island transfer, with impacts reaching Iloilo City, growth centers, ports, services, cold chain, households and public facilities when deliverability weakens.

The Cebu–Negros–Panay (CNP) backbone strengthened interconnection and reduced the probability of severe grid failure, ICE said, but downstream bottlenecks, demand growth, on-island supply limits and delayed strategic corridors still left Panay exposed. The lesson from CNP, it added, is not that transmission investment failed but that partial completion leaves economic risk in place.

The western gateway opportunity

Ladrido flagged what it called a quiet but important opening in 2026 DOE and Energy Regulatory Commission (ERC) issuances, which allow critical transmission projects to move outside the ordinary transmission-provider queue through DOE designation, TransCo delivery authority and qualified participation, subject to ERC review, prudency checks, turnover rules and cost-recovery safeguards.

ICE said the western Luzon–Mindoro–Panay corridor is the practical test of that opening. Currently placed in the 2041–2050 planning horizon, the corridor could plausibly move to around 2030 if it passes public-interest, technical, financing, integration and consumer-protection tests — an acceleration question, it stressed, not an automatic commitment.

The opportunity, it said, is to turn Panay’s western position from a reliability vulnerability into a strategic gateway.

ICE closed by underscoring the human development stakes: higher bills cut household disposable income, hospitals and clinics face continuity risk, schools lose productive time, cold storage faces spoilage risk, small firms lose sales and absorb backup costs, and weaker confidence delays investment and hiring.

The Visayas, it said, does not only need more megawatts — it needs a power system capable of protecting welfare, supporting livelihoods and carrying growth.