The 21st City Council has approved a resolution urging the Power Assets and Liabilities Management Corporation (Psalm) to refrain from reducing its power supply contract with Davao Light and Power Co., warning that the move could lead to higher electricity rates in the city.
Councilor Louie John Bonguyan, chair of the Committee on Energy and Water, said Psalm currently provides about 30 percent of Davao Light’s total power supply, making it a critical source of affordable electricity for Davao City.
Bonguyan said Davao Light previously received 90 megawatts from Psalm, but the state-owned firm has opted to cut its supply beginning in 2026. Any reduction, he said, would likely result in higher power costs for consumers.
If Psalm pushes through with the reduction, Bonguyan said Davao Light would be forced to source more electricity from the Wholesale Electricity Spot Market (WESM), where power prices are significantly higher than those of Psalm.
Psalm supplies the cheapest power in the market, largely sourced from the Agus–Pulangi hydropower complex.
“So if makuha natu 90 percent sa WESM ang impact ana sa Davao City musaka ang atoang price which is ang ilaha 50 centavo per kilowatt hour ang ilahang murag computed na musaka here sa Davao City (most of our power comes from WESM, the impact on Davao City is an increase in electricity prices. Based on their initial computation, that could mean an increase of about 50 centavos per kilowatt-hour),” Bonguyan said in a media interview Tuesday, Jan. 21, 2026, at the Sangguniang Panlungsod.
He said that retaining Psalm’s contracted supply is crucial to protecting consumers from steep rate hikes. The council passed the resolution to formally urge Psalm to reconsider the planned reduction.
Bonguyan said his committee will study the city’s current energy situation and closely coordinate with Davao Light to help prevent electricity prices from skyrocketing.
Another supplier
Meanwhile, Davao Light President and Chief Operating Officer Engr. Enriczar Tia said support from the local government is vital as the company appeals to Psalm to maintain its power allocation.
Tia said the worst-case scenario is that Psalm proceeds with the reduction, which could trigger a 50-centavo increase in electricity rates as early as February.
If that happens, Davao Light would be forced to procure additional power from WESM, he said.
Tia assured the public that Mindanao still has an adequate power supply, although prices may fluctuate depending on supply and demand.
“Si Davao Light as a responsible power utility mangita me ug pinakabarato (As a responsible power utility, Davao Light will always look for the cheapest available power),” he said in a media interview.
Asked about the reason for Psalm’s decision, Tia said the corporation cited the aging condition of its power plants, which has resulted in reduced generating capacity. He said he is unsure whether other PSALM clients were affected, but Davao Light’s allocation has already been cut.
Davao Light draws power from multiple sources, with about 50 percent coming from renewable energy. These include PSALM and Hedcor hydroelectric plants in southern Mindanao. Around 20 to 30 percent comes from the Therma South coal plant, while the remaining supply is sourced from WESM.
Tia said relying on a single power supplier is not advisable, as an outage in one plant could disrupt electricity service across the entire coverage area. Multiple sources ensure power remains available even if one facility goes offline.
P2 increase not related to Psalm cut
Tia clarified that the P2 increase in residential electricity rates covering Jan. 11 to Feb. 10, 2025, is not connected to PSALM’s planned power supply reduction.
Earlier, Davao Light reported that the overall residential rate rose to P11.7187 per kilowatt-hour, up by P2.0052 from P9.7135 per kWh in December 2025. The company said the increase was driven mainly by higher power costs from WESM.
Several power plant outages last month reduced available supply, forcing distribution utilities to buy more electricity from the spot market at higher prices.
Tia said WESM prices are expected to stabilize by January as several power plants have already returned to operation. RGP