The Bangko Sentral ng Pilipinas (BSP) has projected that electricity rates will further increase, with around Php 15.77 billion in power generation costs potentially being passed on to consumers.
The adjustment is expected to be spread equally over the next three years, beginning in June 2024.
In a report by The Philippine Star, the BSP indicated a high probability that the Energy Regulatory Commission (ERC) will soon authorize the collection of these additional power generation costs, as stated in its latest Monetary Policy Report.
This expectation follows a 2022 Supreme Court decision that nullified the ERC’s 2014 cap on Wholesale Electricity Spot Market (WESM) prices for November and December 2013. The ERC initially capped these prices to counteract the high electricity costs imposed by power generation companies during the Malampaya gas field maintenance shutdown.
Increasing electricity rates will contribute to the country’s inflation, which has remained within the BSP’s target range of two to four percent for five consecutive months. Inflation rose to 3.8 percent in April from 3.7 percent in March, averaging 3.4 percent in the first four months of the year.
Beyond rising electricity rates, the BSP’s inflation outlook is influenced by higher global oil prices, increased food commodity prices due to supply constraints, and the implementation of a legislated minimum wage increase.
The BSP noted a medium probability of escalating geopolitical conflicts in the Middle East, which could drive up global crude oil prices.
According to the World Bank’s April 2024 Commodity Markets Outlook, the risk scenario projects that Dubai crude oil prices will average $94 per barrel from May to December 2024.
Rising fuel costs and restrictive import policies are also expected to reduce fish supply, and inadequate import programs are affecting sugar and onion availability.
The central bank also highlighted a medium probability for increased fares in public transport and higher toll rates.
