Expect months of hearings, sound bites, and very little clarity. This is because investigating NGCP to explain these alerts is, with respect, an exercise in futility.
Look at the numbers NGCP itself released on May 15. Luzon had 13,508 megawatts (MW) of available capacity against a peak demand of 13,881 MW — a shortfall of 373 MW.
But 4,106 MW were simply unavailable: 16 plants were on forced outage, some since May and others dating back to 2019, while 14 more were operating on derated capacity.
The Visayas faced a similar problem. Around 841 MW of capacity were unavailable, with several plants offline since 2021, 2023, 2024, and 2025.
The grid did not falter because the system operator was asleep. It faltered because there is not enough generation capacity, and much of what exists is old, unreliable, and frequently breaking down.
Transmission limits
NGCP is not entirely blameless. Two transmission lines tripped during the same week, worsening an already tight power situation, and the company owes the public a serious explanation regarding its asset management practices.
But transmission lines are not the reason aging subcritical coal plants keep tripping. Nor are they the reason the country has failed to build enough replacement capacity.
The real problem lies upstream of the wires.
So who decides when, where, and what kind of power plants get built in the Philippines?
The honest answer is: no one in particular.
The Wholesale Electricity Spot Market (WESM) operates as what economists call an “energy-only market.” Generators are paid only for the electricity they actually produce. They are not compensated for ensuring capacity will be available years from now, when demand inevitably rises.
The Reserve Market, which began commercial operations in August 2024, is a useful addition. It allows NGCP to procure ancillary services through transparent auctions rather than bilateral contracts.
But it remains a short-term operational mechanism. It does not encourage investment in new steel-and-concrete generation capacity.
Missing signals
What the country lacks is a true capacity market — a forward auction system, possibly conducted three to four years before delivery, where load-serving entities are required to secure enough firm capacity to meet projected peak demand plus reserve margins.
Under such a system, generators — including battery storage providers and demand-response operators — would compete to supply future capacity.
At present, the burden largely falls on Distribution Utilities (DUs) and Electric Cooperatives (ECs), which conduct their own Competitive Selection Processes (CSPs). But this creates a fragmented and uncoordinated view of the country’s future energy needs.
Worse, these CSPs remain subject to government pricing controls. In effect, the market is not truly deregulated because pricing — and ultimately supply decisions — are still heavily influenced by the government rather than by actual market signals.
Blame NGCP if it makes us feel better. But until we build a market that clearly signals investors when, where, and what type of capacity must be built, we will keep having this same conversation every summer. —Ed: Corrie S. Narisma
A power industry expert with over 40 years in experience as chief executive officer in firms ranging from banking, power, and advisory services.
