Power subsidies miss target as costs surge — PIDS
Power subsidies meant to shield poor households from rising electricity costs are failing to reach their intended beneficiaries even as government spending climbs, according to a new Philippine Institute for Development Studies (PIDS) study.
The study found that under earlier consumption-based eligibility rules, more than 60 percent of households in many regions qualified for lifeline rate benefits, raising concerns subsidies were spread too broadly instead of focused on the poorest consumers.
PIDS senior research fellow Dr. Kris 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 Universal Charge for Missionary Electrification (UCME), which funds power access in off-grid 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 subsidies.
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“We are not recommending the removal of these cross-subsidies because we believe they are serving an important equity goal,” she said. “Our priority is simply to improve targeting and reduce leakages.”
The study urged tighter integration of welfare and utility databases to better identify subsidy recipients.
Responding to the findings, Department of Energy official Antonio Barcelona said reforms are already underway, including linking lifeline rate eligibility to 4Ps beneficiaries and indigent households under Republic Act 11552.
Barcelona added that UCME support remains necessary in off-grid areas where electricity generation still relies heavily on more expensive diesel power.
