The Philippines' three major electricity subsidy programs—the Universal Charge for Missionary Electrification, the lifeline rate, and the senior citizen discount—play a key role in protecting vulnerable consumers. However, weakness in targeting has led to substantial leakage, with benefits accruing to nontargeted consumers. This Policy Note finds that reliance on a single-dimensional eligibility criterion has led to inclusion errors. As subsidies expand, the financial burden is increasingly shifted to nonsubsidized consumers, including businesses, contributing to already high electricity costs—especially in areas with large concentrations of beneficiaries.
Despite these challenges, the Philippines is well positioned to reform its subsidy system. Strong institutional assets, including national household surveys, a social registry, targeted cash transfer programs, and regulatory expertise, provide a solid foundation for improving targeting and monitoring. Leveraging these through better systems integration can enhance efficiency, equity, and fiscal sustainability.
