The Energy Regulatory Commission (ERC) has approved the National Grid Corporation of the Philippines’ (NGCP) PHP 13.06-billion Milaor 500-kilovolt (kV) Substation Project, a key transmission facility intended to support the entry of offshore wind power projects in Camarines Sur and reinforce grid reliability in the Luzon grid, particularly the Bicol region.

In a decision promulgated on December 18, the ERC ruled to approve the project, subject to cost optimization and regulatory review during future transmission rate resets, and directed NGCP to meet strict completion deadlines for the facility’s phased rollout.

The Milaor 500kV Substation is designed as a generation entry point for proposed offshore wind projects in Camarines Sur, several of which are targeting commissioning starting in 2027. The ERC noted that proposed wind projects in Camarines Norte and Camarines Sur collectively account for about 3, 100 megawatts of potential capacity, a scale that existing transmission lines in the Bicol region cannot reliably accommodate without upgrades.

Based on technical simulations reviewed by the commission, the ERC found that without the Milaor project, parts of the transmission network would experience non-convergence and generation curtailment once the wind projects come online. With the substation in place, the grid is expected to operate under normal conditions starting 2027, with full N-1 compliance after 2030—meaning the system can withstand the loss of one major facility without outages.

The project consists of two 1,000-megavolt ampere (MVA) power transformers to be installed in phases. The ERC directed NGCP to complete and commission the first transformer by 2027 and the second by August 31, 2030. The commission said failure to comply with the approved timeline may result in administrative penalties.

The ERC also linked the project to national offshore wind policy, citing Executive Order No. 21, which calls for a whole-of-government approach to offshore wind development and targets operational offshore wind plants by 2028. The commission said NGCP’s grid expansion must be aligned with this timetable to ensure timely integration of new renewable capacity.

From an economic standpoint, the ERC said the project cost of PHP 13.06 billion is significantly lower than the estimated economic losses that could arise if the project is not implemented. The commission estimated that expected energy not served over a 15-year period could translate into more than PHP 43 billion in combined costs to consumers and generators due to curtailment and reliance on alternative power sources .

As part of the ruling, the ERC ordered NGCP to pay PHP 97.2 million in permit fees within 15 days from receipt of the decision.

The commission said the approval of the Milaor 500kV Substation Project is expected to benefit electricity consumers by supporting “continuous, reliable, and efficient power supply” as mandated under the Electric Power Industry Reform Act.

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