Davao City Council Takes Action to Protect Consumers from Potential Power Rate Increases
The 21st Davao City Council has taken a decisive step to protect local electricity consumers by approving a resolution that urges the Power Assets and Liabilities Management Corporation (PSALM) to refrain from reducing its power supply contract with Davao Light and Power Company. This move comes amid concerns that any reduction in PSALM's supply could lead to significantly higher electricity rates for Davao City residents and businesses.
Critical Power Supply at Stake
Councilor Louie John Bonguyan, who chairs the Committee on Energy and Water, emphasized the critical importance of PSALM's current contribution to Davao City's power supply. PSALM currently provides approximately 30 percent of Davao Light's total power requirements, making it a vital source of affordable electricity for the entire city. Bonguyan revealed that while Davao Light previously received 90 megawatts from PSALM, the state-owned corporation has decided to cut its supply beginning in 2026.
"Any reduction in PSALM's supply would likely result in higher power costs for consumers," Bonguyan warned during a media interview at the Sangguniang Panlungsod on Tuesday, January 21, 2026. He explained that if PSALM proceeds with the reduction, Davao Light would be forced to source more electricity from the Wholesale Electricity Spot Market (WESM), where power prices are substantially higher than those offered by PSALM.
Potential Rate Increase of 50 Centavos per kWh
The councilor provided specific figures regarding the potential impact on electricity rates. Based on initial computations, Davao City could see an increase of about 50 centavos per kilowatt-hour if the majority of power must be sourced from WESM instead of PSALM. This significant rate hike would affect all electricity consumers in the city, from residential households to commercial establishments and industrial operations.
Bonguyan highlighted that PSALM supplies the cheapest power in the market, primarily sourced from the Agus-Pulangi hydropower complex. The council's resolution aims to formally urge PSALM to reconsider its planned reduction and maintain its current contracted supply to protect consumers from steep rate increases.
Davao Light's Perspective on the Situation
Davao Light President and Chief Operating Officer Engr. Enriczar Tia expressed appreciation for the local government's support as the company appeals to PSALM to maintain its power allocation. Tia confirmed that the worst-case scenario would involve PSALM proceeding with the reduction, potentially triggering a 50-centavo increase in electricity rates as early as February 2026.
"As a responsible power utility, Davao Light will always look for the cheapest available power," Tia assured during his own media interview. He explained that if PSALM reduces its supply, Davao Light would have no choice but to procure additional power from WESM at higher market rates.
When asked about PSALM's reasoning for the planned reduction, Tia cited the corporation's explanation regarding the aging condition of its power plants, which has resulted in reduced generating capacity. While unsure whether other PSALM clients were similarly affected, Tia confirmed that Davao Light's allocation has already been cut.
Diversified Power Sources and Recent Rate Adjustments
Tia provided important context about Davao Light's power sourcing strategy. The company draws electricity from multiple sources to ensure reliability:
- Approximately 50 percent comes from renewable energy sources, including PSALM and Hedcor hydroelectric plants in southern Mindanao
- Around 20 to 30 percent originates from the Therma South coal plant
- The remaining supply is sourced from WESM
This diversified approach prevents over-reliance on any single power supplier, ensuring that electricity remains available even if one facility experiences operational issues. Tia emphasized that depending solely on one supplier could lead to service disruptions across the entire coverage area if that facility goes offline.
The Davao Light executive also clarified that a separate P2 increase in residential electricity rates covering January 11 to February 10, 2025, is not connected to PSALM's planned power supply reduction. This earlier rate adjustment, which brought the overall residential rate to P11.7187 per kilowatt-hour, was primarily driven by higher power costs from WESM due to several power plant outages in December 2025.
Ongoing Monitoring and Coordination
Councilor Bonguyan stated that his committee will continue to study the city's current energy situation and maintain close coordination with Davao Light. This ongoing collaboration aims to help prevent electricity prices from skyrocketing and ensure that Davao City residents have access to reliable and affordable power.
Tia provided some reassurance regarding the broader power situation in Mindanao, noting that the region still maintains an adequate power supply overall, although prices may fluctuate depending on supply and demand dynamics. He expressed optimism that WESM prices would stabilize by January as several power plants have already returned to operation following the December outages.
The Davao City Council's resolution represents a proactive approach to addressing potential energy challenges, demonstrating local government's commitment to protecting consumers from unnecessary financial burdens while ensuring the continued availability of essential electricity services.
