The Davao Light and Power Company (Davao Light) has warned that electricity rates could rise by as much as P0.50 per kilowatt-hour in a worst-case scenario if the Power Sector Assets and Liabilities Management (PSALM) Corporation pushes through with its proposed reduction in contracted power supply for 2026.
Davao Light President and Chief Operating Officer Enriczar Tia told the media that the projected P0.50 per kilowatt-hour increase represents the worst-case scenario should PSALM fully implement the proposed supply cut.
“Ang worst na impact is at 50 cents na increase per kilowatt-hour. That is the worst,” Tia said.
The warning came as the Davao City Council on Tuesday passed a resolution urging PSALM to retain Davao Light’s 2025 contracted supply level for 2026 and to refrain from reducing its allocation.
Councilor Louie John Bonguyan, chair of the Committee on Energy and Water and proponent of the resolution, said the city government invited Davao Light to a council discussion to clarify the potential impact of PSALM’s proposal.
PSALM was created to manage, privatize, and dispose of the assets and liabilities of the National Power Corporation (NPC) after the restructuring of the Philippine power sector under the Electric Power Industry Reform Act (EPIRA) of 2001.
Bonguyan explained that PSALM is proposing to cut its contracted supply to Davao Light from 180 megawatts to just 90 megawatts beginning next year.
He said that the power supplied by PSALM is largely sourced from the Agus–Pulangi hydropower plants, which provide some of the cheapest electricity in the country.
“For many years, we have been enjoying 180 megawatts coming from PSALM. About 30 percent of Davao Light’s power supply comes from PSALM,” Bonguyan said.
He also noted that a significant reduction would force the utility to source more expensive replacement power.
Davao Light, the country’s third-largest electric distribution utility and the sole franchise holder in Davao City, earlier informed the city government that the proposed contract changes could lead to the P0.50 per kilowatt-hour rate increase.
The City Council stressed that such an increase would adversely affect the general welfare of Davao City’s 1.9 million residents, burdening households, discouraging investors, and impacting the operations of large corporations as well as micro, small, and medium enterprises (MSMEs) that drive the local economy.
When asked where Davao Light would source the reduced 90 MW, Tia said the utility would turn to the Wholesale Electricity Spot Market (WESM) to purchase available supply.
WESM is a market where electricity is bought and sold in real time between generators (power producers) and distribution utilities or other qualified buyers.
“Here in Mindanao, nothing to worry about because we still have adequate power. We can still get additional supply from the spot market, though like any market, prices may vary depending on supply and demand,” he said.
Currently, Davao Light sources around 30 percent of its power from WESM. Tia said this share would likely increase if the 90 MW from PSALM is cut.
He also outlined the company’s energy mix: approximately 50 percent renewable energy, 20–30 percent coal from Therma South, and the rest from the spot market.
The council expressed hope that PSALM would heed the appeal to prevent higher electricity costs and ensure uninterrupted power for residents and businesses.
