From concessions to competition: A journey through the evolution of the Philippine electric grid system, 1892–2021

Abstract

This article traces the development of energy generation in the Philippines, tracing its origins back to 1892 and spanning through the significant reforms ushered in by the Electric Power Industry Reform Act (EPIRA) in 2001, and the subsequent two decades. The early chapters of this history witnessed the establishment of pivotal companies like Compania La Electricista and Manila Railway & Light Company (Meralco), which hinged on foreign investment and expertise. Meralco’s expansion encompassed the establishment of diverse power plants, including hydroelectric facilities, to cater to the escalating electricity demand. However, concerns surrounding foreign dominance and reliance on imported resources led to the creation of the National Power Corporation (NPC) in 1936 tasked with harnessing hydraulic power and increasing state participation in the energy sector. The post-war era witnessed the NPC’s significant role in bolstering the nation’s growing economy, especially through its expansive power development program and the nationalization of the electric power landscape. Despite progress in rural electrification, the NPC encountered challenges like financial constraints, political complexities, and the contentious Bataan Nuclear Power Plant project, which impeded its operational efficiency. The 1990 s unveiled a severe power crisis due to financial constraints and inadequate infrastructure. In response, the government sought to invigorate the sector by incorporating private sector engagement through independent power producers. To rectify inefficiencies and stimulate competition, the EPIRA was enacted in 2001 to steer the energy sector toward a comprehensive overhaul by restructuring the power industry and divesting NPC’s generation and transmission assets. This article provides insights into the historical trajectory of the Philippine energy sector, culminating in a series of reforms aimed at cultivating a more streamlined and competitive power sector, positioned to meet the nation’s ever-evolving energy needs.