ERC Greenlights ₱90-B Grid Link: DMCI Power Faces Strategic Crossroads, SGP Gains from Transmission Push

The Energy Regulatory Commission (ERC) has approved the National Grid Corporation of the Philippines’ (NGCP) ₱89.98-billion Batangas–Mindoro 500-kilovolt interconnection and backbone project, a landmark initiative that will connect Mindoro to the Luzon grid and reshape the island’s power dynamics.

Under the ERC directive, Stage 1 of the project must be completed by September 30, 2027, with Stage 2 targeted for December 31, 2030. Once operational, Mindoro will cease to be an off-grid missionary area, enabling access to cheaper and more stable electricity from the national grid.

Impact on DMCI Power

DMCI Power, the exclusive off-grid supplier in Oriental Mindoro, currently serves the province through diesel and bunker plants under long-term contracts. In 2024, the company sold 104.8 GWh in Mindoro, generating an estimated ₱1.62 billion in revenue at an average tariff of ₱15.5/kWh.

Analysts warn that the interconnection will erode DMCI Power’s competitive advantage:

Luzon grid rates (₱5–₱7/kWh) could displace DMCI’s high-cost generation.
Contract renegotiations or non-renewals are likely post-2027.
Existing plants risk becoming stranded assets unless repurposed for backup or renewable integration.

Why It Benefits SGP

Synergy Grid & Development Phils., Inc. (SGP), the holding company of NGCP, stands to gain from this development. The Batangas–Mindoro link is part of NGCP’s 2025–2050 Transmission Development Plan, aimed at strengthening and expanding the national grid. For SGP:

Regulated returns: Transmission projects earn stable, regulated revenues under ERC-approved tariffs.
Long-term growth: The ₱90-billion investment adds to NGCP’s rate base, boosting future earnings.
Strategic positioning: Enhances NGCP’s role in grid modernization and reliability, reinforcing SGP’s value proposition to investors.

Investor Takeaway

For DMCI Power, the project signals a structural shift: earnings from Oriental Mindoro will remain stable until 2027 but face steep declines thereafter. For SGP, the interconnection project is a growth catalyst, underpinning its regulated revenue model and long-term expansion strategy.

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