The government should tighten competition safeguards in the country’s power sector as it amends the two-decade-old Electric Power Industry Reform Act (EPIRA) of 2001, with preliminary research showing that the five largest conglomerates control about 85 percent of nationwide installed generation capacity, according to state-run policy think tank Philippine Institute for Development Studies (PIDS).

In an Aug, 11 position paper, PIDS senior research fellow Kris A. Francisco said proposed amendments to Republic Act (RA) No. 9136 should strengthen restrictions on cross-ownership between power generation and distribution while improving the regulatory capacity as well as independence of the Energy Regulatory Commission (ERC).

The paper provided comments on 11 pending measures seeking to amend EPIRA: Senate Bill (SB) Nos. 63, 346, 367, 1088, 1091, 1164, 1477, 1950, 2109, and 2112, as well as House Bill (HB) No. 6540.

Francisco said preliminary results of an ongoing PIDS study showed that the two largest conglomerates jointly accounted for roughly 43 percent of total national installed power capacity as of 2025, while the five largest groups controlled about 85 percent.

While conventional concentration measures make the generation sector appear more competitive, Francisco said this was driven by fragmentation among smaller players rather than greater competition among the biggest power groups. Preliminary estimates also pointed to high markups and an apparent exercise of market power, although she stressed that the findings remain preliminary, hence would be refined before publication.

The PIDS study also found early evidence that incumbent conglomerates were extending their positions in fossil fuel generation into renewable energy (RE), raising implications for competition as the country shifts toward cleaner power sources.

According to Francisco, EPIRA’s existing market-share caps have been unable to prevent pivotal supplier behavior, making reforms that address corporate conduct and control, rather than relying solely on ownership thresholds, necessary.

In particular, Francisco backed proposals under SBs 1091, 1950, and 2109 to tighten the separation between electricity generation and distribution, noting the potential conflict of interest when a distribution utility (DU) purchases power from an affiliated generator.

Francisco said the existing 50-percent bilateral-contract cap for associated firms appears to be a weak safeguard against self-dealing in power supply agreements (PSAs), which she described as the most direct channel through which generation market power could affect captive consumers.

However, the position paper opposed extending cross-ownership prohibitions to relatives within the fourth civil degree of consanguinity or affinity, saying such restrictions would be difficult to enforce.

Instead, Francisco favored the approach under SB 1950, which would anchor the determination of associated firms on the definition of “control” under Section 49 of the Philippine Competition Act.

The paper also supported a clearer division of responsibilities between the antitrust watchdog Philippine Competition Commission (PCC) and the ERC, with the PCC handling investigations into anti-competitive practices while the ERC determines violations and imposes penalties based on the PCC’s findings.

Francisco recommended requiring the ERC to act on PCC findings within a fixed period while preserving the energy regulator’s authority to respond independently to signs of market abuse, including capacity withholding and pivotal supplier behavior.

Also, PIDS backed proposals to strengthen the ERC through greater security of tenure for commissioners, stricter conflict-of-interest rules, firm deadlines for decisions, greater fiscal autonomy, improved transparency, as well as additional resources and training.

Francisco also recommended requiring at least one economist on the ERC, given the technical economic work involved in rate regulation, market-power analysis, and benchmark design.

Among competing proposals for the ERC, the position paper said the plan under SB 1164 to expand the commission to a chairperson and eight members divided into three decision-making teams deserves serious consideration because it would allow three sets of cases to be decided simultaneously.

If lawmakers retain the current five-member commission, Francisco said firm decision deadlines proposed under SB 1477 should instead become the primary mechanism for speeding up ERC decisions, accompanied by sufficient additional staff to prevent rushed rulings or missed deadlines.

PIDS also supported, subject to safeguards, a proposal to allow summary proceedings for PSAs and other contracts certified by the Department of Energy (DOE) that fall within ERC-determined benchmark prices.

Francisco warned, however, that poorly designed benchmarks could become a “safe harbor” for above-competitive prices. She recommended that benchmarks be specific to technology, grid, as well as load profile; draw from competitive price discovery such as Green Energy Auction (GEA) and Wholesale Electricity Spot Market (WESM) data; be publicly disclosed and regularly updated; as well as remain subject to post-approval audits.

PIDS also supported increasing the maximum administrative fine to ₱500 million from ₱50 million, with inflation indexation and refunds to consumers, arguing that the current ceiling is not an effective deterrent for conglomerates given their scale.

On proposals allowing the government to re-enter power generation, PIDS favored a limited approach. Francisco warned that broadly allowing state-run National Power Corp. (NPC) or other government-owned and/or -controlled corporations (GOCCs) to build and sell renewable power could crowd out private investment, distort WESM price formation, as well as create new contingent government liabilities.

Instead, Francisco supported limiting state generation to missionary, off-grid, and clearly underserved areas where market failure is most evident.

PIDS also supported reforms to the universal charge (UC) as well as the privatization of the WESM operator and its governance arm, provided that their independence from industry players can be verified.

However, Francisco called for further scrutiny of a proposal to zero-rate value-added tax (VAT) on generation sales, saying there was no guarantee that the tax savings would be passed on to consumers. She recommended that the measure undergo revenue-impact assessment by the Department of Finance (DOF), alongside an ERC mechanism to determine whether the tax savings translate into lower retail electricity rates.