Companies owned by some of the country’s richest business tycoons have run circles around government regulators, allowing them to gain control of the country’s clean energy resources. Last year, Ramon Ang’s San Miguel, port magnate Enrique Razon Jr.’s Prime Infrastructure, and the Lopez family’s First Gen Corporation won lucrative contracts to exploit the country’s hydroelectric and geothermal energy resources.

This is the story of how these companies got those contracts at the expense of consumers who must now shoulder power costs that could have been lower if there had been true competition.

Part 1: The clean energy rush

For centuries, the lush forests of Mount Ping-as in Pakil, Laguna were explored only by locals and pilgrims climbing toward a chapel at its summit. No longer. 

Today construction workers are clearing trees and carving a six-kilometer road leading to the mountaintop where a massive reservoir is being built. The reservoir is part of a hydroelectric project that works like a giant rechargeable battery: Water is pumped up from nearby Laguna de Bay through a long canal when the power grid has more electricity than people need. When demand spikes, that water is released back down, spinning turbines that can generate 1,400 megawatts (MW) of electricity—enough to power over half of the entire Visayas. 

Along the same ridgeline, drilling crews have been camping since January, preparing the ground for wind turbines that will soon stretch across the neighboring towns of Paete and Kalayaan.

Ping-as is not alone. In the upland villages of Rizal, the Upper Wawa Dam in Rodriguez town is being linked to a reservoir on a neighboring peak. Like the hydropower project in Pakil, water will surge between the two basins through an underground tunnel, adding another 600 MW to the grid by 2030.

Across the country, mountains are being carved, coastlines are being studied for offshore wind, and vast tracts of land are being converted to solar farms. The Philippines has set an ambitious goal: generate half its electricity from clean sources by 2040. This will require 20,000 MW of new renewable capacity.

The stakes are high. Nearly two-thirds of the country’s electricity comes from burning coal that pollutes the air, drives climate change, and leaves consumers at the mercy of volatile global prices. The Philippines already has the second-highest electricity rates in Southeast Asia. Every peso of that bill is money ordinary Filipinos cannot spend on food, school fees, or medicine.

Renewable energy promises a cleaner and affordable alternative to fossil fuels. Power from wind, water, sunlight, and geothermal heat produces little to no emissions and shields consumers from pass-on fuel charges and price shocks tied to global commodity markets.

Miriam Dela Cruz has been waiting for that change her whole life. The 22-year-old working student grew up in Sitio Ligtas, a remote upland village near the Upper Wawa Dam, where electricity comes from diesel generators or is borrowed from neighbors in the lowlands through extended power lines. Her family recently bought solar panels, but they run out at night. “Napaka-importante po sa amin ng murang kuryente dahil hindi sapat ang kita sa hanapbuhay,” she said.

Millions of Filipinos share Miriam’s hope. But in a country where a small circle of powerful business families controls the power supply and government oversight remains weak, the energy transition is no guarantee of relief. Even the government’s most well-intentioned efforts to boost clean power can be captured by the country’s wealthiest tycoons who have become so rich and so powerful, only they have the means to build critical infrastructure.

The pumped storage hydropower projects being built on these mountains—owned by tycoons Enrique Razon Jr. and Federico Lopez—are a telling example of how big corporate interests can ride the wave of the renewable energy boom while undermining its promise of affordable electricity.

 Part 2: The uncompetitive bidding

In February 2025, the Department of Energy (DOE) opened the third round of bidding for the government’s Green Energy Auction Program (GEAP), which was intended to drive down electricity costs by making clean energy companies compete against each other for contracts. That did not happen. Instead, there was little competition, and the winning bidders would end up billing consumers far more than what they could otherwise be paying.

GEAP is the government’s flagship program for boosting clean power generation. For every round, the DOE announces how much renewable energy it wants to add to the grid. Then, developers compete to supply it by offering the price they are willing to charge per kilowatt-hour (kWh). The DOE picks the cheapest offers until the targeted capacity is met.

Winning a contract is a boon for businesses: The government guarantees that for the next 20 years, whatever electricity they feed into the grid will be paid at the rate they secured in the auction, even if power prices drop. That difference between the auction rate and the market rate is then passed on to consumers. Since January, electricity users have been paying what’s known as the GEA allowance, which is tacked on to their monthly bills.

Here’s how it is computed: the National Transmission Corporation forecasts how much electricity all operational GEA plants can produce in a year. Then, it calculates how much they should be paid by calculating the difference between the auction rate and the actual rate in the open market. This difference, plus other administrative costs and a buffer fund to cover payment delays, is divided across all electricity consumed nationwide, so each consumer’s share depends on how much power they consume. The Energy Regulatory Commission (ERC), the body that ensures fair electricity prices, reviews and approves the final rate. 

In 2025 to 2026, the GEA allowance was calculated at P0.0371 per kWh. For a typical household consuming about 300 kWh of electricity a month, this means paying around P133.56 more per year. This may not seem like much. It may even be offset in the future. Over 2,400 MW of solar and wind locked in under earlier GEA rounds and expected to be operational this year still generate power more cheaply than the open market which averaged last year at P4.421 per kWh. When that cheaper supply pushes out expensive fossil-fuel power, it can in theory drag down market prices for everyone.

But households will only feel that relief if utilities buy more from the open market rather than sticking with pricier long-term contracts with select power plants. If not, cheap renewable power just sits on the grid while bills stay high.

Thanks to its many volcanoes, the Philippines is one of the world’s largest producers of geothermal power. Last year, the DOE opened the bid for 100 MW worth of geothermal capacity; seven plants in Batangas, Bicol, Negros Island and Cotabato were qualified to bid. But only three joined the auction, offering just 30.1 MW, or roughly a third of the 100-MW target. All three were owned by the Lopez family’s First Gen Corporation. With no rival bidders, there was effectively no competition. It was almost certain the offers would be accepted.

In April 2025, the ERC told the DOE that all three Lopez-owned plants quoted prices that were too high. The ERC had set P5.1092 per kWh for the expansion of existing geothermal plants and P7.6441 for new ones as the reasonable maximum that still allows companies to turn a profit.

Then ERC chairperson Monalisa Dimalanta pointed this out in an internal report, “The Energy Regulatory Commission’s Evaluation Report for the Third Green Energy Auction (GEA-3)”,  which she addressed to then-energy secretary Raphael Lotilla. PCIJ obtained a copy of the report from a trusted source who asked not to be named and confirmed its findings with Dimalanta and three other sources.

The Energy Development Corporation, a subsidiary of Lopez-owned First Gen, had offered P12.2867 per kWh for its new Bago plant in Negros Occidental, 60 percent higher than the ERC’s maximum rate for new plants. The same company offered P9.9316 per kWh for its existing Mindanao 3 plant, nearly twice the maximum calculated by the ERC. 

Bac-Man Geothermal Inc., another First Gen affiliate, offered P8.2 per kWh for its new Tanawon plant in Bicol, exceeding the ERC limit by nearly P0.6.

The ERC said that the absence of the 52-MW Maibarara Geothermal Plant in Batangas, which was originally qualified, enabled remaining bidders to deliberately increase their offers. Maibarara withdrew because the facility won’t be able to deliver power by 2027, which was the DOE deadline for geothermal plants, according to the ERC report. Without competition from Maibarara, First Gen was guaranteed to win the bid. 

Alberto Dalusung III, energy transition adviser at the Institute for Climate and Sustainable Cities, believes that there’s no point in bidding if there’s no real competition. The DOE, he said, should have ensured that the capacity being offered by potential bidders exceeds twice the amount it is opening up for auction. If the DOE is auctioning off 100 MW, it should ensure the bidders together have the capacity to produce 200 MW.

If there was low participation, Dalusung said, the department should have accepted just half of the total capacity offered to avoid higher-end offers. In the case of the geothermal bids, that would be around 15 out of the 30 MW.

Energy undersecretary Rowena Guevara, who supervises the program, asserted that while the department foresaw more than 100 MW of capacity from potential bidders, “some were not able to qualify in time for the auction.” She was also cold to the idea of simply accepting half of the total capacity offered. “The capacity is direly needed and since ERC set a ceiling for the rates, the auction proceeded,” she said.

Part 3: How Razon cornered a hydropower deal

In November 2024, DOE planned one big competition for 4,000 MW of hydropower capacity to be delivered by 2032. Under these rules, the four cheapest bids out of eight would have already covered the 4,000 MW target, with price offers ranging from P2.9 to P3.5 per kilowatt per hour (kW/h). This includes the Kibungan, San Roque Lower East, San Roque West and Maton projects, all located in the mountainous Cordillera Administrative Region.

A month later, the DOE raised the target to 4,250 MW and split the auction into three batches with different deadlines:

• Lot 1: 2,000 MW for plants that can go online between 2028 to 2030
• Lot 2: 2,000 MW for plants that can go online between 2031 to 2032
• Lot 3: 250 MW for plants that can go online between 2031 to 2035

The DOE said this split guaranteed a gradual delivery of power over the next decade. It also ended up favoring ports magnate Enrique Razon Jr., a relative newcomer in power generation, and allowed him to expand his footprint in an industry long dominated by the Lopez and Aboitiz families and San Miguel.

Razon’s Prime Infrastructure had plants in Pakil and Wawa and they offered the highest bids—over P6 per kW/h. With the split auction, they now had higher chances of winning because they only needed to compete with one other bidder: the Kibungan plant run by Coheco Badeo Corporation.  

Kibungan, Pakil and Wawa were the only three that could meet the 2030 deadline for the first lot. And since the two cheapest offers in that category—Wawa plant and Kibungan—could only supply 1,100 MW, the DOE accommodated Pakil’s high offer since it would provide the remaining 900 MW. DOE accepted all three bids. San Miguel’s plant in Aklan won the contract to supply 250 MW since it was the only one that satisfied the 2031 to 2035 deadline in the third lot. It had no rivals.

After the bidding, San Miguel bought a stake in Coheco Badeo. Two months before the auction, it also bought a 40-percent stake in the company that fully controls Pan Pacific, thereby cornering all but two of the seven plants that won bids. 

In the end, the DOE accepted bids for 6,350 MW, split between San Miguel and Razon’s Prime Infrastructure, with the highest price offer reaching P6.16 per kW/h, nearly 40 percent more than the open market rate last year. Consumers will now be billed for more than 2,000 MW of extra electricity that the DOE had not previously planned for. 

Dimalanta, who oversaw the auction review, personally believes San Miguel and Prime bid aggressively because they were confident they would win regardless. She expressed her misgivings before the February 2025 bidding took place. “We immediately flagged it to the DOE. ‘Pag ganito ka-konti, is this still ideal for an auction if you only have a handful of bidders?’” she recalled. The DOE assured them it would be fine.

Energy insiders and consumer advocates worry that once the contracted plants come online, power bills would soar. They point out that these pumped storage hydropower plants will be paid for their entire capacity whenever they are called on, whether or not they deliver the electricity in full. This means they will be paid in kilowatts per hour, and not per kilowatt-hour. 

The DOE, however, defended its decisions, saying the auction advances the country’s goal of reaching 35% renewable energy by 2030 and 50% by 2040, up from just 25% last year. “We needed guaranteed capacity by a certain timing,” energy undersecretary Guevara told PCIJ. She also stressed the importance of pumped storage hydropower plants, which are paid for storage since they absorb excess electricity when supply outpaces demand, and release it back to the grid when people need it most.

 Part 4: The flagged power bids

The ERC wasn’t convinced. Digging deeper, it found that most of the companies that joined the auction appeared to have based their price offers on questionable cost figures. About 99.86% of all submissions simply copied the maximum cost assumptions the commission itself had set as a ceiling and not as a target. 

“This reveals a critical disconnect between regulatory intent and practical implementation,” the ERC report said, adding that the pattern raised serious concerns about whether the submitted figures were credible or aligned with the auction’s purpose.

Renewable energy should also lead to lower prices in electricity. Instead, it’s increasing the prices because it’s captured.”

Environmental lawyer and climate expert Antonio La Viña

The report singled out Prime Infrastructure’s subsidiaries for quoting rates above the acceptable range and basing those quotes on assumptions that did not accurately reflect their projects.

Here is the issue in plain terms: pumped storage hydropower plants typically last 40 years. Ahunan Power, Inc. had previously declared its Pakil plant could operate for 50 years. Olympia Violago Water and Power Inc. said its Wawa plant could run for 35 years. Both are owned by Razon’s Prime Infrastructure. Early this year, the Lopezes’ First Gen bought a 40% stake in these hydropower projects.

Yet when both companies submitted their P6 per kW/h price offers—the two highest in the pumped hydropower storage category—some of their financial calculations assumed they would only have 20 years to recover their costs.

A shorter repayment window means higher annual costs, which drives up the price they charge consumers. “Ang loan kasi nila, usually 20 years, diba. Pero ang lifetime ng plant is 40 years. Oh, so sabi ng ERC, divide (the loan) by 40, not by 20,” Guevara explained.

The ERC eventually recommended lower rates for the plants and five other qualified bidders based on corrected data. This effectively became a ceiling for each bid. All but one accepted the cuts. 

To energy experts and consumer advocates, last year’s auction reinforces a long-standing concern: when just a few powerful business families dominate electricity generation, consumers are hostage to electricity rates unchallenged by competition.

Petronilo Ilagan, president of the National Association of Electricity Consumers, said that a truly competitive auction could have brought the prices lower than the imposed ceilings. “‘Yung ceiling na yan is just the ceiling, not necessarily dun agad ang presyo mo. Hindi ibig sabihin dapat ganun ang kita mo. It could be less than that.”

Environmental lawyer and climate expert Antonio La Viña put it plainly. “Renewable energy should also lead to lower prices in electricity. Instead, it’s increasing the prices because it’s captured,” he said. “That’s what we have to change. That’s what we have to make more transparent. We have to push back against oligarchs.”

Just five companies control nearly 70% of the national grid, based on ERC data as of May 2026. That concentration of power did not happen overnight.

Part 5: Power in private hands 

Under Ferdinand Marcos Sr.’s dictatorship in the 1970s, the state held a monopoly over all major power plants through the National Power Corporation. This allowed the government to keep electricity prices low for residential consumers, according to a 1994 World Bank document.

By 1983, however, the state corporation had incurred massive financial losses that hindered it from maintaining aging power plants and building new ones. Electricity shortages plagued the final years of the Marcos regime.

In 1987, President Corazon Aquino ended Napocor’s monopoly through Executive Order No. 215, encouraging private companies to enter power generation in the hopes of solving the shortage. But the crisis only deepened.

New capacity could not keep pace with growing demand, and by the early 1990s, daily blackouts lasting eight to twelve hours battered regions across the country. The outages “severely crippled the economy as factories were forced to close or reduce operations. Productivity fell and unemployment rate increased,” according to a 2007 paper from the Philippine Review of Economics.

Under President Fidel Ramos, Congress allowed Napocor to fast-track new power plants—many of them coal- and gas-powered—built by private developers. The blackouts eased, but electricity prices rose as contracts forced consumers to pay for an oversupply of power they did not need.

At the turn of the millennium, the government formally handed electricity generation to the private sector. The Electric Power Industry Reform Act of 2001 (EPIRA) mandated the sale of government power assets to private businesses with the goal of improving energy security, expanding electrification, and lowering electricity prices through competition. Today, over 90% of installed power in the national grid is wholly controlled by private corporations, according to ERC data. 

The ERC, which was created by the same law, is tasked with ensuring fair electricity rates and guarding against market abuse. It had not always been a strong regulator but in the case of GEA-3, the commission went as far as scrutinizing why the auction rules bred opportunistic behavior among energy giants.

But while the ERC had power over the rates it could not change the auction rules it deemed problematic. Under EPIRA, the DOE issues the policies and the ERC enforces and implements. “In the end, what is the responsibility of ERC? Pricing. The responsibility of DOE is the terms of reference and making sure we have enough supply,” Guevara said.

Naturally, businesses will protect their interest. They would like to earn more… Will the government do its function in protecting consumers?”

Consumer welfare advocate petronilo ilagan

Consumer advocate Ilagan argues that in bidding out GEA-3, the DOE had betrayed the spirit of EPIRA, which is to guarantee that the power supply is obtained at the least cost. But he commended the ERC. “Tama yung ginawa ng ERC diyan,” he said. 

In the past, Ilagan had been critical of the ERC, particularly for not reviewing charges that power companies pass on to consumers. In 2023, he accused then ERC chair Dimalanta of failing to recalculate Meralco’s rates, which led to her suspension in September 2024. She regained the post two months later after the Ombudsman lifted the order and resigned in July 2025.

But Ilagan also wants the ERC to use its rate-auditing powers more aggressively. The tariffs given to GEA developers are fixed for 20 years. But he says this should be periodically reviewed to see if the rates are excessive in the long run.

“Naturally, businesses will protect their interest, “ he said. “They would like to earn more. That’s business. So that’s where the government should be aggressive in a way,” he said. “Will the government do its function in protecting consumers?”  

Part 6: The making of a ‘just’ energy transition

By one measure, the DOE’s clean energy program is working. Its auction rounds have secured over 20,000 MW of renewable energy capacity through 2035. This is already enough, on paper, to meet the Philippines’ target of generating half its electricity from clean sources by 2040.

Two more bidding rounds are set this year: one for offshore wind and another for waste-to-energy projects. Amid rising fuel prices driven by conflict in the Middle East, the DOE has also fast-tracked the delivery of 1,471 MW from renewable energy plants already under development.

But megawatts alone are not the measure of a just energy transition.

“Just transition means that the burden of the energy transition or any climate transition we do to reduce carbon emissions is not borne by the environment, biodiversity, and by people, especially the poor,” said La Viña, who led the Philippine delegation at COP21 in 2015. There, governments vowed to limit global warming to 1.5 degrees Celsius through the Paris Agreement.

The country still has a long way to go. Starting in 2010, coal’s share of the country’s power generation climbed steadily. By 2024, it dominated the mix at 62% while renewables fell to 22%.

Energy experts who spoke with PCIJ said the government’s push to accelerate renewable energy is necessary. But they warn that without reforming how clean energy is procured and priced, the transition risks delivering the same outcome of privatization that works better for companies than for consumers.

For ICSC’s Dalusung, who served at the Ministry of Energy under the Marcos Sr. administration, the fix starts with the auction rules themselves. He said that some renewable energy technologies really have high upfront costs. By designing truly competitive rules, only then can developers enter into price wars that would compel them to bring down offers. “We need to do a second look at the protocols,” Dalusung said.

Back in the upland villages of Rizal, 23-year-old boat operator Gideon Gumaad said he and his neighbors remain skeptical about the hydropower project rising in their town. He grew up near the Upper Wawa Dam and watched the project transform the landscape. His family sold their land to the developers and relocated to a nearby village to make way for the project.

But in a place where reliable electricity has never been guaranteed and alternatives like diesel generators, borrowed power lines, and solar panels are never enough, hope is hard to let go. Gideon wishes for the project to ease the burdens his community has long carried. “Nagtataka talaga ang mga tao kung makakatulong ba talaga. Sana nga,” he said. —PCIJ.org

What was our process in writing the story?

PCIJ obtained a copy of the ERC’s internal evaluation report from a trusted source who asked not to be named. Then, we asked other sources to corroborate its authenticity and contents, including former ERC chairperson Monalisa Dimalanta, energy undersecretary Rowena Guevara, and other sources who have firsthand knowledge of GEA-3. This process took nearly three months.

To ascertain the ownership history of the companies involved, PCIJ accessed their filings with the Securities and Exchange Commission and other publicly available documents uploaded by the firms themselves (conglomerate maps, prospectus, etc.).

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