Households face a cascade of price hikes, with increases in fuel, electricity, water, and transport fares expected as early as next month, driven partly by the ripple effects of the Middle East conflict and the weakening peso.

Water bills of customers of Manila Water Company and Maynilad Water Services are set to rise slightly starting April after the Metropolitan Waterworks and Sewerage System approved the second-quarter foreign currency differential adjustment (FCDA).

The adjustment increases the foreign-exchange component of water tariffs in both concession areas, reflecting movements in the peso that affect the utilities’ foreign currency-denominated loans used to finance water and wastewater projects.

The peso has weakened sharply against the US dollar recently, hitting new record lows of P59.50 to P59.70 per dollar, a movement directly tied to the escalating military tension in the Middle East, global risk aversion and surging oil prices.

Renewed safe-haven demand has investors shifting to the US dollar as a “safe haven” asset amid the heightened geopolitical risks.

More expensive fuel imports inflate the country’s import bill, widen the current account and trade deficits, and increase demand for US dollars.

In the East Zone served by Manila Water, the FCDA will increase to P0.39 per cubic meter from P0.35 in the first quarter, translating to an average increase of P0.04 per cubic meter.

In the West Zone, Maynilad customers will see the FCDA move to -P0.13 per cubic meter from -P0.22 per cubic meter previously. While the charge remains negative, the change results in an average upward adjustment of P0.09 per cubic meter.

The MWSS Board of Trustees approved the MWSS Regulatory Office’s recommendation after evaluating the utilities’ petitions filed in January.

Patrick Lester N. Ty, chief regulator of the MWSS Regulatory Office, said the mechanism ensures that utilities can either recover losses or realize gains from exchange-rate movements tied to their foreign loans.

“The FCDA is a quarterly-reviewed tariff mechanism that allows the concessionaires to recover losses or give back gains arising from fluctuations in foreign exchange rates, as payments are made for foreign currency-denominated loans that are used to fund the expansion and improvement of water and wastewater services,” Ty said.

He added that the adjustment serves as a corrective measure to prevent under- or over-recovery resulting from foreign exchange fluctuations.

The MWSS Regulatory Office also urged low-income households to apply for the Enhanced Lifeline Program, which exempts eligible customers from the FCDA and offers reduced water rates.

Introduced in January 2025, the program covers beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps) who consume up to 20 cubic meters per month, aiming to keep water services affordable for vulnerable households despite periodic tariff adjustments.

Decision on fare hikes

The Department of Transportation said the decision on the petitions for fare hikes will be made next week.

Transportation Secretary Giovanni Lopez said, “Definitely, we are going to resolve the petitions for the fare hike. I’m quite confident that we can decide by next week.”

Buses, jeepneys, and airport taxis filed fare-increase petitions with the Land Transportation and Franchising Board, Lopez said. The petitions will be resolved in the order that they were submitted.

Maximize indigenous use

The Petroleum Association of the Philippines, meanwhile, has urged power generation companies to maximize the use of domestic natural gas, saying the country still has unused indigenous capacity that could reduce reliance on expensive imports.

“There is an opportunity to fully implement the downstream natural gas law by maximizing the use of indigenous gas,” said PAP chairperson Donnabel Kuizon Cruz in a Senate hearing on Wednesday, 11 March.

“We still have capacity there that we can use and push into our power generation companies so we can help reduce prices,” she said.

Amid proposals to suspend petroleum taxes, the group has advocated for the full implementation of Republic Act 12120, or the Philippine Natural Gas Industry Development Act, as a long-term safeguard against price volatility.

Cruz noted that Section 38 of the law — which exempts the sale of indigenous natural gas and the electricity generated from it from the VAT — could deliver additional savings for consumers.

Cruz, who is also president and CEO of Prime Energy, operator of Service Contract 38 covering the Malampaya Deep Water Gas-to-Power Project, said locally produced gas offers a significant cost advantage over imported liquefied natural gas (LNG).

Electricity generated from Malampaya gas costs about P4.80 per kilowatt-hour, compared with P10.30 per kilowatt-hour for imported LNG, she said.

“That’s how big the difference between our own fuel in the country is compared to imported gas today,” Cruz told the senators.

Highlighting the link between energy independence and national security, Cruz noted that global tensions involving Iran serve as a wake-up call to strengthen the country’s domestic fuel supply.

She described the 2022 extension of the Malampaya Service Contract as the catalyst for the country’s recent upstream successes.

“The Iran conflict underscores the importance of having our own resources — our own indigenous or domestic fuel sources such as indigenous gas, oil, and indigenous coal,” she explained.

Cruz said the policy shift has already yielded tangible results: “The government’s move to extend the license was very timely. This allowed us to start drilling for new wells, and we already had one discovery, with hopefully more to come.”

Energy stakeholders are coordinating with the Department of Energy to manage the country’s fuel mix amid the global market uncertainty.

Break it gently

The Energy Regulatory Commission (ERC) was urged to ensure that the looming increases in power rates will be strictly implemented on a staggered basis to spare consumers from another price shock.

The Senate energy committee said power firms must be strongly advised to refrain from imposing a so-called “one-time, big-time” price increase in electricity rates to prevent further financial distress to the consuming public who are already grappling with persistently rising fuel costs.

“The electricity sector is a regulated industry and the ERC should not allow one-time, big-time increases in electricity rates. Now is the worst time to increase electricity costs,” the Senate panel warned.

Electricity rates are expected to jump by as much as P4 per kilowatt hour in April, according to ERC chairperson and CEO Francis Saturnino Juan, citing the ongoing conflict in the Middle East.

The Philippines sources 95 percent of its oil from the Middle East, a major global oil exporter.

Sharp jump in monthly bills

Dominant power distributor Manila Electric Co. has advised consumers to brace for a sharp power rate hike as early as this month, citing higher transmission and generation costs.

The increase for March is pegged at P0.6427 per kWh, raising the overall rate for a typical household to P13.8161 per kWh from P13.1734 per kWh in February. This translates to an extra P129 for households using 200 kWh.

While government intervention in electricity pricing has been curbed under the Electric Power Industry Reform Act of 2001, the government may intervene in the event of a supply shortage, Sen. Sherwin Gatchalian said.