CONSUMERS are generally unawae about how the power rates they are being charged by Meralco are being determined.

Thus when Meralco announced its latest rate hike—57 centavos per kwh—the silence from the usual groups was taken to mean acquiescence.

Little did all know that there’s such a thing as competitive selection process, or CSP.

There is a permanent equation that CSP cannot brush off—higher fuel costs equals higher generation costs equals higher billing for consumers.

CSP is mandated by law but the law failed to foresee the full control that is handed to power distribution utilities, in this case Meralco.

Meralco can always say it was just implementing Energy Regulatory Commission (ERC) rules and is pushing fuel formula that is binding to the power plants.

However, other factors determining LNG costs are borne by consumers. One is freight costs which isn’t fixed but rises or falls depending on market forces.

The CSP seems to favor indigenous gas which is naturally cheaper because of the Malampaya field.

CSPs, under Meralco, is doing mere lip service to indigenous gas—power supply agreements, or PSAs, are awarded to indigenous plants only in case of a tie with plants running on imported gas.

In awarding most of the 3,000MW capacity to power plants that run on imported gas, Meralco has made each Filipino vulnerable to the well-known instability of global oil prices, which is sure to rise by 50% in a mere two months and up to 600% in two years.

.Meralco says it has no way to predict future prices.

It allegedly ignores unassailable historical data on the stability of indigenous gas prices and instability of global gas prices.

Filipino are in danger of being at the mercy of LNG traders who could easily just stop delivering gas to the Philippines and sell it to others.

This is precisely the reason that Pakistan has had a national energy crisis since 2023.

It is not an exaggeration to say that the 1,200MW CSP is another nail on the coffin of the Philippine oil and gas exploration industry.

What Philippine company would be willing to fund the hundreds of millions of dollars needed to drill an exploratory well and the hundreds of millions of dollars more needed to drill a development well, if they know that gas-fired power plants would only buy their fuel from abroad?

These call into question the DOE’s Philippine Energy Plan for 2020-2040’s ability to deliver on its promise of “secure, sustainable and resilient energy”.

Around 25% of the country’s energy is expected to be delivered through natural gas.

This will likely grow as natural gas fired power plants are the obvious replacements to the country’s aging and obsolete coal plants.

If more than a fourth of the country’s energy comes from natural gas, one can immediately see the potential destruction that can be wrought where that gas is subject to the unpredictable price and supply shocks built into the very nature of imported LNG.