Power subsidies meant to shield poor households from rising electricity costs are failing to reach their intended beneficiaries even as government spending continues to rise, according to a new Philippine Institute for Development Studies (PIDS) study.
The state-run think tank urged policymakers to tighten targeting rules and improve data sharing across agencies to ensure subsidies reach consumers who genuinely need support while keeping programs financially sustainable.
Presenting the study “Making Electricity Subsidies Work: Cross-Country Lessons for Philippine Energy Policy,” PIDS Senior Research Fellow Dr. Kris Francisco said the country’s major electricity subsidy programs — the Universal Charge for Missionary Electrification (UCME), Lifeline Rate, and Senior Citizen Discount — face fiscal and implementation pressures despite expanding energy access.
“We treat electricity as a basic need,” Francisco said, noting that subsidies help households participate more productively in the economy and support broader development goals.
The study found that under earlier consumption-based eligibility rules, more than 60% of households in many regions qualified for lifeline rate benefits, raising concerns that subsidies were spread too broadly instead of being focused on the poorest consumers.
Francisco said electricity consumption alone is an unreliable indicator of poverty.
“Lower consumption does not necessarily mean that a household is poorer,” she said. “Consumption thresholds alone are not enough to identify poor households and should be complemented with household welfare data.”
She added that some low-income families may register higher electricity use because several households share a single meter, while wealthier consumers can keep consumption artificially low through solar panels or energy-efficient appliances.
Meanwhile, spending for the UCME, which funds electricity access in off-grid and remote areas, rose from P7.05 billion in 2020 to a projected P28.6 billion in 2024.
Despite rising costs, Francisco said the study does not recommend removing the subsidies.
“We are not recommending the removal of these cross-subsidies because we believe they are serving an important equity goal,” Francisco stressed. “Our priority is simply to improve targeting and reduce leakages.”
The study called for tighter integration of government welfare and administrative databases, including the Philippine Statistics Authority’s Family Income and Expenditure Survey (FIES), the Department of Social Welfare and Development’s 4Ps and Listahanan systems, and utility consumer records.
Responding to the findings, Department of Energy (DOE) Power Market Development Division Officer-in-Charge Antonio Barcelona said reforms are already underway to address weaknesses in earlier subsidy schemes.
Barcelona cited Republic Act No. 11552, which tied lifeline rate eligibility to 4Ps beneficiaries and indigent households certified by local government units, reducing dependence on electricity consumption thresholds alone.
He added that UCME support remains necessary in missionary and off-grid areas, where electricity costs remain high because generation still relies heavily on diesel power.
To reduce long-term subsidy dependence, Barcelona pointed to DOE “graduation” policies and hybridization projects integrating renewable energy into off-grid systems. The reforms aim to keep assistance focused on consumers facing persistently high electricity costs and limited access to reliable power.
