Now that she’s officially appointed at the “hot seat” of the Department of Energy (DOE), the honeymoon is over from her day one in office as designated Energy Secretary Sharon S. Garin is not exactly a newbie in the sector – so, it’s time for her to deliver electricity consumers’ expectation of lower power rates and concretize the 100 percent household electrification promise of the Marcos administration.

Both mandates are tough, but cutting power rates will be a steeper climb—especially with presumptions that Garin will be enforcing policies on “priority dispatch” and mandated capacity share for plants using Malampaya gas; all that while also lining up some pricier technologies, like offshore wind, in green energy auction (GEA) that will be administered by the DOE during her term.

If Garin fumbles the merit order in the Wholesale Electricity Spot Market (WESM) or misfires on technology diversification, she won’t just miss the mark; she’ll go down as the Energy Secretary who made electricity an even heavier burden on Filipino consumers’ pockets.

Everyone in the industry knows that Garin is an unyielding and proud nuclear advocate— and yes, it could be a crucial piece of the country’s long-term energy security goal—but let’s skip the sugarcoating and make the conversation honest and forthright: nuclear comes with monstrous front-loaded investment cost. Consumers need that truth up front; the initial impact could be a bill shock, especially if there are no government guarantees or subsidy; and only over decades that nuclear will earn its keep as a cheaper source of power for the country.

The DOE is similarly rushing a capacity auction for offshore wind, and while this technology appears to be a clean win, on a deeper dive, it actually comes with heavy baggage—tariff projections at ₱10 to ₱15 per kWh will hit consumers hard. Beyond that, there is no clear government plan yet on compensating displaced fisherfolk or safeguarding marine biodiversity that will be affected at their project sites and navigation channels. If Garin wants public trust, she’ll need more than just turbines in the water; she must strictly require solutions for the stakeholders to be affected and take accountability for environmental protection for these installations, so she must kickstart those ‘hard conversations’ before firming up the auction process.

Republic Act No. 12120, or the Philippine Downstream Natural Gas Industry Development Act, establishes the legal framework for indigenous gas development, encompassing two key mandates: priority dispatch for power generated from indigenous gas in Malampaya and a mandated minimum share of electricity that must run on it.

An analysis paper furnished by Geronimo Law, which has been constantly monitoring key developments in the energy sector, bluntly pointed out that priority dispatch and mandated gas share will prompt “significant intervention in what is otherwise a liberalized market.”

Sure, the gas share mandate for Malampaya is well-intentioned because we really need to develop our indigenous gas resources for long-term energy security – but who will tell the consumers that the “priority dispatch play” and mandated gas share will hike their electric bills and not lower it?

The prescription of the Electric Power Industry Reform Act (EPIRA) is for the power sector to supposedly operate on least-cost procurement and competitive dispatch in the Wholesale Electricity Spot Market (WESM). As it is assessed, however, the new gas mandate will throw out the level playing field playbook and will instead shove higher-cost power into the grid and will gamble consumer pockets for the sake of policy over pricing.

In a true competitive power market, the crucible is survival of the cheapest – because generators are lined up according to their short-run marginal cost (SRMC); and the WESM follows a ‘merit order’ of dispatch wherein the lowest-cost plants will be called for dispatch first, then climbing up the ladder until demand is met. The last and priciest plant to make the cut sets the market clearing price, and every dispatched unit gets paid on that rate; even for renewables which might be bidding at zero.

Yet with the gas share mandate and priority dispatch enforcement, WESM will already be compelled to dispatch higher-cost gas even when it is not needed; and that will push out other technologies even if they will provide lower-cost electricity to consumers.

As highlighted by Geronimo Law, “priority dispatch creates a market distortion by not reflecting true production costs in dispatch decisions…new gas generators know their power is mandated and prioritized, thus, there is no pressure to be cost efficient. Lower cost competitors – like coal – are penalized by being withheld from dispatch.”

If the gas share will be enforced rigidly, it will certainly oblige the system operator to sideline cheaper plants just to hit the mandated quota -- so during off-peak hours or when renewables surge, gas plants might be running not because they’re needed, but because policy says so. That kind of interference torpedoes optimal dispatch and it will jack up market clearing price, therefore, it turns expensive gas into the default price-setter in the spot market; and that will leave consumers stuck with inflated spot prices, day in and day out.

Initial calculations show that priority dispatch for plants feeding on Malampaya gas may drive up market clearing price at WESM by roughly ₱2.00 per kilowatt hour (kWh) – and that’s a financial burden that the DOE must comprehensively explain to consumers.

Then with the targeted pile up of pricier technologies in the mix (i.e. offshore wind and nuclear by the turn of the decade); the writing on the wall is crystal clear -- power rates aren’t dropping anytime soon; they’re going up and they may climb fast. So for residential consumers and smaller businesses and establishments that are still not in the retail competition threshold, it’s evidently an unwinnable deck: pay up or power down, because real choice isn’t exactly on the table for them.

Just like the elusive ₱20 per kilo rice, Marcos’ promise of 100 percent household electrification in his 2023 State of the Nation Address (SONA) is still gridlocked like a “soundbite fantasy”—because on the ground, millions of Filipinos remain in the dark - literally and figuratively - as the electricity access pledge still flickers on delivery to their homes.

With Garin now prospectively steering the DOE ship for the rest of Marcos administration’s term, the burden of electrifying every last Filipino home lands squarely on her shoulders. And while she’ll need work-support from the National Electrification Administration (NEA) on this as well as that of the National Power Corporation (NPC) for the off-grid domains—the results, or the failure of this undertaking, will have her name stamped all over it.

Beyond that, the new energy chief will also need to take on a tougher job of fixing the worsening blackouts in off-grid areas where power outages have become a daily plague – and hopefully, she will visit more of these local ‘blackout zones’ and sort out real solutions with the affected consumers; instead of the public and industry seeing her routinely on diplomatic detours.

Garin stepped into the DOE helm knowing fully well the public’s rage over sky-high power bills and relentless blackouts in some areas—and now that she’s holding the reins, the question isn’t whether the problems are tough, but whose interests she’ll serve in solving them. Because in this “show of power,” everyone’s watching who she’ll bow to: the Filipino people, or the forces behind the curtain.