[Vantage Point] Consumers pay for DOE’s delayed action on Leviste firms

This column shows how government-delayed action allowed thousands of megawatts promised by Solar Philippines Power Project Holdings Inc. and monetized through SP New Energy Corp. to remain unbuilt for years — long enough for the cost of delay to be passed quietly onto consumers through higher power prices, thinner reserves, and recurring grid alerts. By detailing the missed milestones, dormant contracts, and regulatory blind spots that enabled early monetization ahead of delivery, it explains how execution risk was shifted from a developer to utilities, lenders, and households. Only after the Vantage Point exposé forced public accountability did enforcement accelerate — leaving a blunt lesson for markets and regulators alike: when oversight comes late, consumers pay first, and reform arrives only after the damage is done.

When the Philippine government finally moved to cancel dozens of Batangas First District Representative Leandro Legarda Leviste’s renewable energy contracts and announced roughly ₱24 billion in penalties, the message from the Department of Energy (DOE) was unambiguous: execution matters, electricity prices matter, and non-delivery will no longer be tolerated.

In isolation, that message is correct. In context, it is incomplete.

What Filipino consumers do not realize is that they are already paying for years of regulatory delay — they just do not see it itemized on their bills. 

Why? Because the grid puts a price on scarcity in real time. When contracted renewables don’t arrive, the system fills the gap with whatever is available — often costlier marginal supply — so the incremental cost shows up in generation charges and related adjustments on monthly bills. 

When promised renewable capacity fails to arrive on schedule, the power system does not pause or forgive; it compensates. Utilities lean more heavily on higher-cost generation, reserve margins thin, and grid alerts become more frequent — all of which keep prices elevated. That is the hidden cost of delayed enforcement. 

Long before enforcement rhetoric hardened, the warning signs were already visible — and they carried specific numbers. By October 2024, Solar Philippines Power Project Holdings Inc. had failed to deliver 11,427 megawatts, or roughly 63%, of the 17,903 megawatts withdrawn by the DOE across 163 renewable energy projects in 2024–2025. Within Solar Philippines’ own portfolio, 21 of 42 Renewable Energy Service Contracts were already facing discontinuance or termination for missed milestones, with several projects showing little to no construction progress despite years of extensions. At the same time, value was being realized elsewhere: capacity, through SP New Energy Corp. (SPNEC), that had not yet been built was being monetized via public markets and strategic transactions premised on future delivery.

These were no longer theoretical risks. They were documented facts — visible in disclosures, auction outcomes, and grid planning assumptions. Yet the system moved slowly, treating years of accumulated nonperformance as a technical inconvenience rather than a structural failure. It took public scrutiny to force the question regulators had deferred: how did thousands of megawatts promised by Solar Philippines become so easy to monetize through SPNEC before a meaningful share of that power was ever built?

PARTNERS. Leandro Leviste (left) and Manila Electric Company (Meralco) chief Manny Pangilinan pose after Meralco subsidiary MGreen and Solar Philippines New Energy Corporation (SPNEC) announce that MGreen had invested P15.8 billion in SPNEC, on November 30, 2023. Courtesy of Solar Philippines

The answer lies not in a single scandal, but in a series of regulatory blind spots that compounded over time. Milestone enforcement lagged, with repeated deadline extensions diluting deterrence. Relative to the scale of non-delivery, performance bonds proved insufficiently punitive. 

Show-cause orders did not translate into timely cancellations. Screening at award emphasized auction compliance, not construction readiness — land titles and grid clearances were not uniformly required upfront. Assignment and disclosure rules allowed projects to be bundled into listed platforms without triggering early accountability. Individually, these were procedural gaps. Together, they enabled a system where expectations became saleable assets and enforcement arrived only after monetization.

This failure matters because electricity pricing is systemic. Power markets do not price intentions; they price supply conditions. When contracted renewable capacity does not arrive, the grid fills the gap with marginal generation that is structurally more expensive. Reserve margins tighten, ancillary services costs rise, and clearing prices adjust upward across the system. There is no line on an electricity bill labeled “undelivered solar,” but the cost is nonetheless embedded in generation charges and adjustments borne by consumers.

How much are consumers paying?

A simple illustration makes the burden concrete, with necessary caveats. Utility-scale solar awarded under recent auctions was priced in the range of ₱4-₱5 per kilowatt-hour. Replacement supply during periods of tight reserves typically comes from higher-cost sources whose effective system cost exceeds that level, especially once reserve and ancillary requirements are included. The resulting price pressure is cumulative, not transactional. This is precisely the logic behind DOE’s own estimate that, had the canceled contracts been delivered as scheduled, electricity prices could have been about ₱2 per kilowatt-hour (kWh) lower by 2030. At a modest household consumption of 200 kWh per month, that difference translates to roughly ₱400 more each month, or ₱4,800 a year — paid not as a penalty or surcharge tied to any single project, but as an everyday cost of capacity that never showed up.

To be clear, electricity prices are influenced by many factors: fuel costs, demand growth, weather patterns, and global commodity cycles. But complexity does not render non-delivery price-neutral. System planning already assumed the entry of thousands of megawatts of lower-cost renewable power. When that capacity failed to materialize, the system adjusted in real time, embedding the cost of delay into average prices long before any penalty was imposed. The absence of a clean, itemized pass-through does not negate the economic effect; it merely obscures it.

Utilities are not the protagonists of this failure. Distribution companies procure power within regulatory rules and do not control construction timelines. But they — and their customers — absorb the consequences when upstream enforcement arrives late. A system that allows capacity to be counted before it is built effectively socializes execution risk, shifting the cost of regulatory patience onto households and businesses.

The government’s recent moves — terminating contracts and announcing penalties — address accountability, but they do not reverse the costs already borne. For consumers, those costs are embedded in bills they have been paying for years. For markets, the lesson is sharper and less forgiving: credibility in Philippine clean energy is not established when regulators finally act under scrutiny. It is established when execution is enforced early enough that megawatts, not permissions, define value — and when monetization is never allowed to outrun delivery.

In the end, the reckoning is already visible. The system compensated for absent capacity with higher-cost power, thinner reserves, and recurring alerts, quietly passing the price of delayed enforcement onto consumers. Penalties announced today may satisfy demands for accountability, but they cannot claw back the economic damage already socialized. Until execution reliably precedes monetization, Philippine clean energy will remain vulnerable to the same failure: a market where promises trade easily, power arrives late, and the public pays the difference.

For markets, the takeaway is clear: the credibility of the country’s clean energy sector relies on consistent, early enforcement of projects, not on belatedly announced penalties under public scrutiny. Market valuation must be anchored in tangible power generation (megawatts), not just permits and permissions, and this action must occur before the financial aspects (monetization) outpace actual project delivery. Ultimately, external pressure is necessary to ensure accountability.

According to DOE disclosures, Solar Philippines failed to deliver roughly 63% of its awarded capacity across 163 projects, completing barely 2% of commitments even after extensions and show-cause orders. Those numbers were not discovered overnight. They accumulated over years, across multiple auction rounds, and amid repeated deadline slippages. Yet decisive enforcement arrived only after the projects had already been monetized, transferred, or bundled into platforms sold to institutional buyers.

This sequencing matters. Markets price credibility not just on penalties imposed, but on whether regulators act before incentives become misaligned.

DOE Secretary Sharon Garin is right to say that thin supply and rising demand prevent electricity prices from falling. She is also right in saying that the DOE must act as a disciplinarian. Where the explanation falls short is in addressing why discipline arrived after the economic damage had already been socialized — to utilities, lenders, and consumers — while founders had already secured liquidity.

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What we know now

By October 2024, within Solar Philippines’ own portfolio, 21 of 42 DOE Renewable Energy Service Contracts were already facing discontinuance or termination for missed milestones, with several projects showing no meaningful construction progress despite multi-year timelines and extensions. At the same time, value was being realized elsewhere, specifically through its listed affiliate SPNEC: capacity that had not been built was being monetized via market transactions premised on future delivery. 

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Opportunists 

The pattern extends beyond one firm. Secretary Garin herself described a style of development in which bidders reserve land and contracts, delay construction for years, then sell to foreign or institutional investors once valuations peak. She called them “opportunists.” Markets call it “regulatory arbitrage.” Either way, the behavior flourishes only when oversight tolerates it.

This is where politics and markets intersect — not as allegations, but as signals. Legislative franchises and regulatory confidence can be lawful and still distort incentives. They reduce perceived friction, extend patience, and make scale feel sanctioned. That confidence becomes bankable. You do not need to sell a franchise to sell its value; you only need to convert the certainty it creates into expectations — before delivery is required.

In the end, the reckoning is already visible on the electric bill. The system compensated for years of undelivered capacity with higher-cost power, thinner reserves, and repeated alerts, quietly passing the price of delayed enforcement to consumers. That cost cannot be clawed back by belated penalties or press conferences. 

Markets must realize that credibility in Philippine clean energy is not built when penalties are finally announced under public pressure. It is built when execution is enforced early enough that megawatts, not permissions, anchor valuation — before monetization outruns delivery and accountability is demanded from the outside. – Rappler.com

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