The Philippine power industry is divided into three major sectors: generation, transmission and distribution.

Under the present power industry structure, NPC generates its own electricity and buys electricity from IPPs.

Generation used to be a monopoly of the NPC until the issuance of Executive Order No. 215, which opened the generation sector to private investors. At present, a number of IPPs generate and sell electricity to NPC and other customers.

NPC transmits electricity to distributors and large industrial customers via high-voltage wires. NPC is also responsible for constructing the transmission grid highway interconnecting the main islands nationwide.

Distribution of electricity at its usable voltage to end-consumer is performed by investor-owned electric utilities, notably the Manila Electric Company (Meralco), a few local government-owned utilities and numerous electric cooperatives which sell to households as well as commercial and industrial enterprises located within their franchise areas at retail rates regulated by the Energy Regulatory Board (ERB).

The Department of Energy (DOE) sets policy directions for the energy industry, while the National Electrification Administration (NEA) provides financial and technical assistance to electric cooperatives.

Two major reforms are embodied in RA 9136, namely, the restructuring of the electricity supply industry and the privatization of the National Power Corporation (NPC). The restructuring of the electricity industry calls for the separation of the different components of the power sector namely, generation, transmission, distribution and supply. On the other hand, the privatization of the National Power Corporation (NPC) involves the sale of the state-owned power firm’s generation and transmission assets (e.g., power plants and transmission facilities) to private investors. These two reforms are aimed at encouraging greater competition and at attracting more private-sector investments in the power industry. A more competitive power industry will in turn result in lower power rates and a more efficient delivery of electricity supply to end-users.