Power spot prices highest in 20 years

Manila, Philippines — Electricity spot prices in the Visayas and Mindanao regions reached near P20 per kilowatt-hour (kWh) in August, marking the highest levels in the spot market's 20-year history, according to data from the Independent Electricity Market Operator of the Philippines (IEMOP). The August average Wholesale Electricity Spot Market (WESM) price in the Visayas rose by 64.9 percent to P18.59 per kWh from P11.29 per kWh in the previous month.

Mindanao saw an even steeper increase of 88.2 percent, with prices climbing from P10.39 per kWh to P19.56 per kWh. IEMOP vice president for trading operations Isidro Cacho Jr. described the prices as "the worst" since WESM commenced commercial operations in 2006, warning consumers in the affected regions, particularly those served by power utilities with higher WESM exposure, to expect further increases.

The severe price surges were primarily driven by reduced electricity supply due to simultaneous forced outages of several power plants, mainly coal-fired facilities. In contrast, Luzon experienced a 34.2 percent drop in spot prices to P4.80 per kWh from P7.30 per kWh in August. These new spot market prices will be incorporated into this month's power generation charges, which typically constitute more than half of consumers' electricity bills.

The overall system-wide WESM rate increased by 11.8 percent to P9.29 per kWh from P8.31 per kWh across the three regions. Despite the decline in supply and demand, regional supply constraints, generation outages, grid alerts, and changes in power flows contributed to the average system price rise. The secondary price cap (SPC), designed to prevent prolonged high prices, was activated during multiple trading intervals but had limited impact as it currently evaluates prices system-wide across the three regions.

Cacho suggested that implementing SPC on a regional basis could be more effective, given the significant price disparities. While Cacho acknowledged the possibility of a market suspension due to elevated WESM prices, he noted that maintaining market openness appears more efficient, provided the SPC and other mitigation measures are applied in line with established rules.

The STAR has requested comment from Energy Regulatory Commission chairman and CEO Francis Saturnino Juan but has not yet received a response. WESM, established under the Electric Power Industry Reform Act, serves as the centralized platform for electricity trading, allowing power utilities to secure their energy requirements. The spot market initially encompassed only the Luzon grid, with the Visayas integrated in 2010 and Mindanao in 2023.