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Cebu has long been heralded as the “Queen City of the South,” an economic powerhouse fueled by tourism, BPO hubs, and a burgeoning manufacturing sector.
Cebu continues to serve as the powerhouse for Central Visayas, driving the region to become the nation’s fastest-growing economic hub. This momentum is evidenced by a steady 7.3% growth rate maintained from 2023 to 2024.
Despite an optimistic outlook for 2026, Cebu’s economic landscape remains vulnerable to obstacles. Industry stakeholders anticipate that institutional volatility and shifting political conditions will weaken investor confidence, while increased scrutiny of public spending threatens to stall vital infrastructure projects. Simultaneously, the rapid integration of AI and fluctuating global tensions are forcing structural changes within the BPO sector, just as the tourism industry grapples with an uneven resurgence due to visa restrictions and intense international competition.
Ultimately, persistent power supply constraints and grid instability represent the most significant threats to the productivity of Cebu’s industrial and manufacturing hubs. While Metro Cebu remains the region’s primary trade engine, the widening disparity in energy costs compared to major hubs like Davao or Iloilo has reached a critical tipping point, directly undermining the province’s economic momentum.
The Widening Rate Gap
Recent data from early 2026 highlights a troubling trend for Cebuano consumers. While residential rates in Davao City have remained relatively stable at approximately ₱11.72 per kilowatt-hour (kWh), and Metro Manila hovers around ₱13.17 per kWh, residents in areas served by the Cebu Electric Cooperatives (CEBECO I, II, and III) are grappling with averages as high as ₱13.37 per kWh.
Even within the province, customers of the Visayan Electric Company (VECO) pay slightly less, around ₱12.79 per kWh, pointing to a systemic disadvantage for those in cooperative-served districts.
According to Nathaniel Chua, convenor of the Cebu Electricity Rights Advocates (CERA), household energy costs spiked by 15% to 20% in early 2026. This surge has outpaced the rising prices of other daily essentials, placing an unprecedented burden on the average family budget.
“…the financial impact on Cebuano households must be balanced with more aggressive utility-side cost-saving measures,” stated Chua.
Moreover, Mandaue Chamber of Commerce and Industry (MCCI) President Mark Ynoc warned that Cebu’s power supply cannot sustain the province’s economic momentum. While Cebu leads the Philippines with a 7.3% GDP growth rate, its energy demand is rising by 150 megawatts (MW) annually.
“And we don’t have the capacity to build 150 MW, even in five years,” Ynoc revealed.
Ynoc added that Cebu’s power instability threatens to alienate investors and forfeit high-value opportunities like data centers. These facilities are exceptionally energy-intensive, requiring 2 MW for every 1,000 square meters of floor area—a demand the province’s current infrastructure cannot reliably meet.
(Also read: Aklan Prepares For Peak Season With Early Restoration Of Unidos-Caticlan Line)
The Cooperative Bottleneck
One of the deterrents to modernization in Cebu’s rural and suburban belts is the structural limitation faced by electric cooperatives (ECs). Research from the University of the Philippines Center for Integrative and Development Studies (UP CIDS) indicates that rural ECs struggle with significant operational hurdles hampered by antiquated infrastructure, excessive system losses, and financial volatility.
High technical losses
CERA maintains that much of Cebu’s high electricity cost is attributed to system loss, which is the energy dissipated or unaccounted for as electricity travels from the generating plants to the end consumers.
“In many cooperative areas, aging distribution systems contribute to higher technical losses, which directly inflate the final bill,” noted Chua.
Currently, ECs are permitted system losses of up to 12%, while private distribution utilities (DUs) are capped at a much stricter 5.5%.
UP CIDS highlighted that private distribution utilities have successfully minimized system losses and optimized resource management by leveraging advanced technology and rigorous oversight. These gains are largely attributed to privatization, which provides the necessary incentives to streamline operations and enhance service delivery beyond the reach of traditional cooperative models.
Lack of Transparency
To further stabilize consumer costs, CERA is advocating for an exhaustive, transparent audit of CEBECO’s distribution practices alongside a fundamental reassessment of all existing supply contracts. Central to their platform is a demand to suspend “under-recovery” collections—essentially deferred costs passed to the public—arguing that such financial burdens on consumers are unjustifiable until the utility significantly improves its operational efficiency.
“Operational excellence is the best hedge against inflation,” asserted Chua.
In late 2022, CEBECO I faced a 10 MW power shortage because it failed to finalize a new competitive bid (CSP) before its existing contract with KEPCO-SPC expired—despite having started the process years earlier in 2019. This forced EC to resort to an emergency negotiated contract with Panay Energy Development Corp (PEDC), bypassing the competitive market testing intended to ensure the lowest price for consumers.
Spot Market Volatility
CERA also noted that a disproportionate dependence on the Wholesale Electricity Spot Market (WESM) exposes the public to volatile price fluctuations. To meet power demand, distributors oftenpurchase supplemental energy from the WESM, where costs frequently escalate during peak usage periods or unexpected power plant outages.
To protect consumers from these unpredictable financial shifts, the group advocates for a more balanced and diversified power supply portfolio.
(Also read: Northern Negros Consumers Unite Amid Visayas Power Supply Concerns)
The Case for Firm Power
Cebu currently obtains approximately 60% of its electricity from generation facilities located off-island. This massive energy import leaves the province’s grid highly susceptible to factors outside local jurisdiction, such as supply deficits in other islands or technical failures in subsea cables. Should a natural disaster or major equipment malfunction sever these connections, Cebu faces an immediate threat to its energy security and economic stability.
Unreliable electricity causes severe financial damage to the region. Data from the advocacy group ILAW indicates that daily, major corporations in Cebu suffer revenue drops of roughly ₱216,000, while small and medium businesses lose approximately ₱82,000 per outage day. Furthermore, the combination of high prices and inconsistent service significantly reduces the disposable income of local households.
Several renewable energy developments have reached operational status in the Visayas as of early 2026, including the 112-MW San Isidro Phase 1, the 145-MWp solar power plant in Bacolod, expected to be operational this year, and the 173-MWp Calatrava solar project.
Although these additions diversify the regional energy profile, they fall short of providing the steady, 24/7 baseload capacity essential for a rapidly developing province like Cebu. Additionally, Cebu has very few flat expanses available for the massive land footprints required by utility-scale solar farms.
“It’s going to be a very hard challenge to let go of coal,” observed Ynoc. “It (coal-fired power plant) is much cheaper, much faster.” The 150-MW Unit 3 expansion of the Therma Visayas Inc. facility in Toledo is currently under construction to provide the essential baseload power needed to secure Cebu’s energy future.
Momentum and Affordability: The Road Ahead
Cebu stands at a crossroads. The province has been named the “richest in the country” for eleven straight years, with the Commission on Audit (COA) confirming that Cebu’s total asset base reached approximately ₱339.85 billion in 2024, resulting in a record-breaking net worth of ₱336.42 billion.
However, its citizens face some of the most expensive utility bills. In 2023, the Philippine Statistics Authority (PSA)-7 recorded a 11.7% family poverty rate in Cebu, which exceeded the national average of 10.9%.
To maintain its economic growth momentum, the provincial leadership must demand more from its ECs and prioritize a diversified energy mix that favors reliability over ideology.
True energy security isn’t just about having power; it’s about having power that the average Cebuano family and the local factory owner can actually afford. If Cebu can bridge the gap between its energy needs and its modern economic ambitions, its “Queen City” status will remain unchallenged.
Sources:
https://www.dof.gov.ph/philippine-economic-briefing-cebu/
https://insiderph.com/groups-warn-of-looming-power-crisis-in-cebu-threatening-growth
https://www.sunstar.com.ph/cebu/cebu-families-face-rising-bills-as-electricity-rates-climb
https://globalnation.inquirer.net/281062/cebus-power-play-securing-energy-for-future-growth
https://www.sunstar.com.ph/cebu/guv-cebu-as-richest-province-must-be-felt-by-people
https://www.philstar.com/the-freeman/cebu-news/2024/12/18/2408226/fewer-poor-families-cebu-2023-psa
https://www.sunstar.com.ph/cebu/aboitizpower-expands-toledo-plant-by-150mw