Philippines DOE Pushes for Balanced Power Sector Reforms Amid VAT Debate and Rising Global Energy Pressures

The Department of Energy (DOE) reaffirmed its commitment to implementing practical, responsible, and long-term measures aimed at making electricity more affordable and reliable for Filipino consumers, while cautioning that any proposal involving Value-Added Tax (VAT) adjustments on electricity must undergo careful evaluation.

In a statement, the DOE explained that the current VAT system operates under a pass-through tax structure, where companies across the power supply chain — from generation firms to distribution utilities — offset the VAT paid on operational inputs against the VAT collected from consumers. According to the department, any move to remove or modify VAT on electricity requires a comprehensive assessment to determine whether the intended savings would be fully and directly passed on to households, businesses, and other end-users.

The DOE said it is prepared to provide technical inputs to economic managers and Congress to ensure that any policy intervention delivers genuine consumer benefits while safeguarding the continuous delivery of essential public services.

Apart from tax-related proposals, the department highlighted its ongoing measures to address rising electricity prices amid the ongoing Middle East conflict. The DOE noted that its interventions have so far helped prevent a potential increase of ₱7.00 per kilowatt-hour in electricity rates, providing immediate relief to consumers.

Looking ahead, the department reiterated its focus on long-term energy reforms, including expanding power supply capacity, accelerating renewable energy development, and strengthening the country’s grid infrastructure to ensure sustainable and affordable electricity.

“Lasting affordability must be built on stable supply, cleaner energy, stronger infrastructure, and sound policy,” the DOE stated.

The department added that it will continue collaborating with Congress, economic managers, regulators, industry stakeholders, and consumer groups to ensure that reforms in the power sector deliver sustainable, inclusive, and meaningful benefits to the Filipino people.