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The Nature and Causes of High Philippine Electricity Price and Potential Remedies

Author

Listed:
  • Majah-Leah V. Ravago

    (Department of Economics, Ateneo de Manila University)

Abstract

This paper investigates the nature and causes of high electricity prices in the Philippines. To understand the nature of the problem, we examine the industry's structure and the ensuing composition of the electricity tariff. Since 2001, the electricity industry has been undergoing a gradual transformation. From being vertically integrated, where the government holds the monopoly over transmission and owns most of the generation assets, the functions of generation, transmission, distribution, and retailing have been unbundled, and, at the same time, an electricity spot market has been established. Concurrent with the unbundling of functions is the unbundling of electricity rates. Two decades since the reform, the electricity rates in the Philippines are still among the highest. The paper identifies the causes and offers potential remedies.

Suggested Citation

  • Majah-Leah V. Ravago, 2023. "The Nature and Causes of High Philippine Electricity Price and Potential Remedies," Department of Economics, Ateneo de Manila University, Working Paper Series 202301, Department of Economics, Ateneo de Manila University.
    • Handle: RePEc:agy:dpaper:202301
    as

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    File URL: https://www.ateneo.edu/sites/default/files/2023-01/AdMU%20WP%202023-01_1.pdf
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    References listed on IDEAS

    as
    1. Ma. Joy V. Abrenica, 2009. "Detecting and measuring market power in the Philippine wholesale electricity market," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 46(2), pages 5-46, December.
    2. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-266, March.
    3. Ausubel, Lawrence M. & Cramton, Peter, 2010. "Using forward markets to improve electricity market design," Utilities Policy, Elsevier, vol. 18(4), pages 195-200, December.
    4. Ravago, Majah-Leah V. & Brucal, Arlan Zandro & Roumasset, James & Punongbayan, Jan Carlo, 2019. "The role of power prices in structural transformation: Evidence from the Philippines," Journal of Asian Economics, Elsevier, vol. 61(C), pages 20-33.
    5. Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1201-1234, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Electricity; Philippines; deregulation;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other

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