Philippines Power Spot Prices Hit 20-Year High, Burdening Households in Visayas, Mindanao

MANILA, Philippines — Electricity spot prices in the Visayas and Mindanao regions of the Philippines have surged to nearly P20 per kilowatt-hour (kWh) in August, reaching the highest levels recorded in the spot market’s 20-year history, data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed. IEMOP data revealed that the average Wholesale Electricity Spot Market (WESM) price in the Visayas jumped by 64.9 percent to P18.59 per kWh in August from P11.29 per kWh in the prior month. Mindanao experienced an even sharper increase, with prices soaring by 88.2 percent to P19.56 per kWh from P10.39 per kWh on a monthly basis. IEMOP vice president for trading operations Isidro Cacho Jr. described these as the “worst” price levels since WESM began commercial operations in 2006. “Expect an increase,” Cacho warned when asked how the elevated spot prices would affect consumers in the two regions, particularly those served by power utilities with greater exposure to WESM. The steep price increases were largely attributed to tighter electricity supply caused by the simultaneous forced outages of several power plants, especially major coal-fired facilities. In contrast, Luzon bucked the trend, with spot prices dropping by 34.2 percent to P4.80 per kWh from P7.30 per kWh. The latest spot market prices will be reflected in this month’s power generation charges, which typically account for more than half of consumers’ electricity bills. Across the three regions, the system-wide WESM rate went up by 11.8 percent to P9.29 per kWh from P8.31 per kWh. Overall supply fell by 4.1 percent to 19,739 megawatts from 20,587 MW, while system-wide demand slipped by 6.7 percent to 13,939 MW from 14,936 MW. Despite the decline in supply and demand, regional supply constraints, generation outages, grid alerts and changes in power flows drove up the average system price. Amid sharp hikes, the secondary price cap (SPC), a preemptive mitigating measure to prevent sustained high prices, was triggered and applied during several trading intervals. Its impact, however, was limited because the mechanism is currently evaluated on a system-wide basis, taking into account prices across the three regions. With Luzon prices averaging around P5 per kWh, Cacho said the much higher prices in the Visayas and Mindanao were diluted when averaged across the three grids. “One of the things we are actually studying now is the application of the SPC on a regional level instead of evaluating it on a system-wide level because of the large disparity in prices,” Cacho explained. Under SPC, a cap of P7.423 per kWh is imposed when the average electricity price for a 72-hour period exceeds P12.41 per kWh. Asked whether the elevated WESM prices could trigger a market suspension, Cacho said it remains a possibility. But he noted that keeping the market open appears to be more efficient, provided the SPC and other mechanisms are implemented in accordance with the established rules. The STAR has sought comment from Energy Regulatory Commission chairman and CEO Francis Saturnino Juan but has yet to receive a response. Established under the Electric Power Industry Reform Act, WESM is the centralized venue for electricity trading where power utilities can source their energy requirements. The spot market initially covered only the Luzon grid when it started commercial operations. The Visayas was then integrated in 2010, followed by Mindanao in 2023.