Indigenous means security
Santa Rita and San Lorenzo are designed to prioritize indigenous Malampaya gas under normal operating conditions.
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Santa Rita and San Lorenzo are designed to prioritize indigenous Malampaya gas under normal operating conditions.
As tensions in the Middle East continue to threaten global energy supplies and drive up electricity costs, the lesson is becoming increasingly clear: Energy security begins at home.
Recent consumer electricity bills reveal a marked difference between the cost of power generated using imported liquefied natural gas (LNG) and that produced from indigenous natural gas.
The gap highlights the value of developing and maximizing domestic energy resources to shield consumers from volatile international fuel prices.
Independent power producer Prime CoreGen, which operates the Santa Rita and San Lorenzo gas-fired power plants in Batangas, supplied 779.5-million kilowatt-hours (kWh), or 22 percent of total energy demand during the period, at an average generation cost of P10.6489 per kWh.
That performance came even as the plants temporarily relied on imported LNG during the scheduled maintenance shutdown of the Malampaya gas field from 15 June to 15 July.
The episode demonstrates both the resilience of the country’s power system and the higher costs that accompany dependence on imported fuel.
The experience reinforces a broader policy lesson: While imported LNG can help ensure supply during disruptions, expanding and sustaining indigenous energy resources remains the more effective long-term strategy for keeping electricity affordable and strengthening the country’s energy independence.
The transition also exposed the fuel supply to a 12-percent value-added tax (VAT), unlike indigenous Malampaya gas, which remains VAT-exempt.
Santa Rita and San Lorenzo’s average generation cost remained well below those of the country’s major LNG-dependent gas plants.
Power supply agreements (PSAs), which accounted for 72 percent of supply in most of Luzon, were led by South Premiere Power Corporation (SPPC), operator of the 1,278-megawatt (MW) Ilijan GasPower Plant, with a 15-percent share, and Excellent Energy Resources Inc. (EERI), operator of a 1,320-MW gas-fired facility, with a 13.6-percent share.
Santa Rita and San Lorenzo are designed to prioritize indigenous Malampaya gas under normal operating conditions. Still, SPPC and EERI have historically relied on imported LNG, making their generation costs more vulnerable to fluctuations in global fuel markets.
Efforts to shield consumers from high electricity prices have previously gained momentum following the enactment of the Philippine Natural Gas Industry Development Act, which recognizes natural gas as having the potential to meet increasing energy demand.
The law mandated power producers to prioritize indigenous natural gas over imported fuels and other conventional energy sources. By doing so, this solidifies natural gas as the primary “transition fuel” as the Philippines shifts toward a cleaner and more sustainable energy mix.
Consumers can look forward to more stable and affordable electricity rates after the law also provided the regulatory stability necessary for the successful execution of the Malampaya Phase 4 project, which saw the drilling, completion, and testing of the Malampaya East-1 and Camago-3 wells earlier this year.
The implications extend beyond electricity prices. As demand continues to grow, the Philippines faces an increasingly urgent need to expand its supply of reliable mid-merit generation.
Without sufficient capacity, coal and gas plants are forced to operate at higher utilization rates to meet daily demand peaks, increasing the risk of forced outages and supply disruptions.
It also makes the integration of cleaner renewable energy sources far more difficult as the grid lacks the flexibility needed to address natural intermittency.
Such vulnerability was evident during the recent supply red alert, when forced outages affected 48 generating units nationwide and prompted rotating brownouts.
During the same period, Santa Rita and San Lorenzo plants were dispatched to help stabilize the Luzon grid, highlighting the role of dependable gas-fired generation in maintaining system reliability.
Using indigenous natural gas shields the country from the vulnerability inherent in relying on foreign markets, where geopolitical tensions, shipping disruptions, and global demand surges can drive up power bills.
