ERC to cap costly power reserve prices
The Energy Regulatory Commission (ERC) is moving to impose a secondary price cap (SPC) in the Reserve Market to protect consumers from prolonged spikes in backup power costs.
Manila, Philippines — The Energy Regulatory Commission (ERC) plans to set a secondary price cap (SPC) on backup power reserve prices to shield consumers from excessive spikes in costs. As Reserve Market operations resume, the ERC is proposing an SPC that activates when prices surpass certain thresholds, calculated using a 72-hour average.
Each type of reserve—regulating up, regulating down, contingency, and dispatchable—would have its own trigger level and price cap. For regulating up reserves, the SPC would be P14.115 per kWh if the three-day average price reaches P15.816 per kWh. For regulating down reserves, the cap would be P14.548 per kWh when prices hit P16.104 per kWh.
Contingency reserves would have a cap of P5.187 per kWh at an average price of P8.940 per kWh. Dispatchable reserves would be capped at P3.216 per kWh if the trigger level is reached at P7.83 per kWh. The SPC would be applied separately for each reserve type in each grid region, meaning a price spike in one grid would not automatically trigger the cap in another.
Ancillary services, such as regulating up and down reserves, contingency reserves, and dispatchable reserves, help maintain grid stability during supply-demand imbalances. ERC Chairman Francis Saturnino Juan emphasized the need for consumers not to pay excessively high prices for reserves. The Reserve Market, operating alongside the Wholesale Electricity Spot Market (WESM), resumed full commercial operations in January 2024.
In December 2024, the ERC introduced an interim price cap of P25 per kWh on reserve offers. Despite relatively low WESM prices in 2024 and 2025, reserve prices remained persistently high, especially in Visayas and Mindanao. An ERC review found that spot market-resourced reserves added an estimated P1.29 per kWh to electricity rates in Visayas in 2025, while long-term bilateral contracts added only P0.02 per kWh.
This led the regulator to temporarily suspend Reserve Market operations and redress consumer protection measures. The ERC is inviting comments on the SPC proposal until Nov. 13 for a public consultation set for Nov. 27. Juan stated, "We are putting this safeguard on the table now so that it is ready before the Reserve Market resumes."
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
