Table of Contents
The Wholesale Electricity Spot Market (WESM) recorded unprecedented price spikes in the Visayas and Mindanao last August, according to the Independent Electricity Market Operator of the Philippines (IEMOP).
Prices surged 64.9% in the Visayas and a record 88.2% in Mindanao, marking the highest levels in WESM’s 20-year history. In contrast, prices in Luzon fell 34.2%.
With this development, the Energy Regulatory Commission (ERC) directed the WESM to calculate the secondary price cap separately for each grid, beginning with the August 2026 billing period.
The ERC’s move came after severe power supply pressures in August, when the Visayas experienced 652 hours of red and yellow alerts. WESM prices in the region climbed as high as P18,590 per megawatt-hour (MWh), while Mindanao logged 89 hours of alerts and prices peaked at P19,560/MWh.
Cebu business groups welcomed the regional price cap, saying it could ease the burden of high power costs. The Mandaue Chamber of Commerce and Industry (MCCI) backed the measure, while the Cebu Chamber of Commerce and Industry (CCCI) urged regulators and industry players to ensure the savings reach consumers.
(Also read: 29 Electric Cooperatives Secure Long-Term Power Lifeline For Luzon, Visayas)
Building a Power System for Growth
The Visayas is at a critical juncture as rising business demand puts the region’s power infrastructure to the test. In Cebu, businesses are seeking dependable, affordable electricity, while efforts to strengthen the grid include investments in transmission, energy storage, renewables, and new power plants.
The challenge was underscored on Sept. 15, when the Visayas grid fell under red and yellow alerts after a 140-MW supply shortfall emerged during peak hours. The National Grid Corporation of the Philippines (NGCP) reported that 962.9 MW of capacity was unavailable, with 12 plants on forced outage and 15 others operating below capacity.
For Cebu’s business sector, the recurring alerts point to a deeper concern: the region’s power system may not have enough resilience to reliably meet growing demand.
“MSMEs and the workers and families who depend on them cannot afford to simply absorb the cost of a problem they did not create,” asserted CCCI President Regan King.
Several projects are underway to strengthen the Visayas grid, including battery storage facilities in Naga and Toledo, 2,179 MW of committed renewable energy capacity, and NGCP’s Cebu-Lapu-Lapu transmission line and substation to support rising demand and new generation.
But recent alerts show that adding capacity alone is not enough. The bigger challenge is ensuring enough dependable power is available when demand peaks, particularly when outages, maintenance, and variable generation reduce the supply margin.
“That makes the question of resource adequacy increasingly important for Cebu and the wider Visayas,” stated a Philstar article. “The region needs enough dependable generation, storage and transmission capacity not only to meet normal demand but also to withstand the loss of major generating units.”
MCCI is also pushing for more reliable baseload capacity that can provide steady power as demand grows. It likewise called for closer scrutiny of NGCP’s transmission development plans. NGCP has been given 30 days to assess how existing grid interconnections can be used more efficiently.
However, for baseload power to provide true reliability, Cebu needs sufficient locally generated capacity, rather than relying heavily on electricity delivered through interconnections.
This need is highlighted by the limits of the existing grid. Philippine Daily Inquirer columnist Jake Maderazo wrote that a congressional inquiry into the power alerts could highlight long-standing gaps in generation and transmission capacity. Even when Luzon has excess power, its ability to send electricity to the Visayas is limited to 440 MW.
“In anticipation of more demand, the interconnection should not just expand, but more power plants should be fast-tracked in the islands themselves,” he stressed.
Additionally, Philstar columnist Boo Chanco argued that while utility-scale solar, wind and battery storage can help close the supply gap, they cannot yet provide the round-the-clock reliability needed by energy-intensive industries.
“Adding units to operational sites is the fastest, lowest-cost way to reinforce the fragile Visayas grid,” he noted.
King agreed that while restoring several large power plants could help ease the Visayas’ immediate supply crunch, it would not address the region’s longer-term capacity needs.
With electricity demand continuing to rise and supply constraints affecting neighboring islands, Cebu will still need additional generation capacity to build a more resilient power system, he added.
Mark Anthony Ynoc, immediate past president of the MCCI, said addressing the power crunch will require coordinated expansion across generation, transmission, and distribution, backed by closer collaboration among the Department of Energy (DOE), ERC, and NGCP on long-term grid planning.
“We’re trying to avoid spending Christmas in the dark,” he declared.
A Bleak Outlook for Businesses
Central Visayas carries significant economic weight, with the region generating about P1.32 trillion in output in 2025, the highest among the country’s regions outside Metro Manila. Its economy grew by 3.7% during the year.
Its economic center, Cebu, is a major hub for manufacturing, tourism, services, and trade, but sustaining that position will depend in part on the reliability of its power supply. For investors, electricity needs to be a predictable business expense, not a source of operational uncertainty.
Months of rotating brownouts are forcing Cebu businesses to rethink operations, from shortening work schedules to relying on expensive backup generators and investing more heavily in solar power. Business groups warned that the rising costs could eventually be passed on to consumers through higher prices.
Meanwhile, soaring power costs are prompting some businesses to scale back spending, reduce their workforce and put expansion and clean-energy investments on hold.
“The business sector cannot build a more competitive Cebu economy on an unreliable power supply,” pointed out King.
Cebu’s manufacturing sector has been hit particularly hard, with power shortages driving up and destabilizing operating costs. For energy-intensive businesses, such uncertainty can squeeze margins, disrupt production planning and make expansion decisions more difficult.
Business groups also warned that the rising costs could eventually be passed on to consumers through higher prices.
“Anything you do with power, anything you do with fuel, anything that affects the supply chain increases consumer cost,” Ynoc noted.
(Also read: Visayas Generation Shortfall Forces 40-MW Daily Power Cuts In Iloilo)
Beyond System Loss: A Supply-Demand Gap
Recently, electricity bills have been facing scrutiny over system-loss charges, with proposals to remove these costs from consumers’ bills through amendments to the Electric Power Industry Reform Act (EPIRA).
The DOE has formed a task force with the ERC, National Electrification Administration (NEA), and electric cooperatives to study the proposal, including the removal of the associated value-added tax (VAT).
But for Maderazo, focusing on system-loss charges and their VAT risks overlooking the larger cost drivers in electricity bills. System-loss charges typically account for about 5%, with VAT adding only 0.6% to 0.8%, while generation, transmission and distribution costs make up roughly 60% to 85% or more.
“In other words, system loss and its attached VAT are peanuts, and focusing on it too much divides attention from what is truly important: adding more power supply and upgrading the power networks,” he wrote. “While the BIR has officially removed the VAT on system loss as of September 14, 2026, it is trivial compared to what is really significant to fixing the supply-demand imbalance.”
This means that while a price cap may provide relief by lowering power bills, it does not address the underlying reliability of electricity supply.
The same distinction applies to businesses investing in rooftop solar, batteries and other distributed energy systems. These can reduce costs and provide a buffer against outages, but they are ultimately a response to grid unreliability, not a replacement for a dependable power system.
“Still, outsourcing the problem to the customer is hardly the long-term solution the country needs,” noted Maderazo, adding that at the system level, the country needs more generation and storage, stronger transmission networks, and greater investment in distribution, particularly in struggling electric cooperatives.
What is at stake in the Visayas extends well beyond the region. Its power crunch reflects a national challenge: how to build an electricity system that can keep pace with rising demand, attract investment and support an economy that needs sustained growth to create jobs and reduce poverty.
The test, then, is not simply whether the lights stay on today, but whether the country can build enough reliable and affordable power for the economy it wants tomorrow. If the Visayas can close its supply gap while strengthening generation, transmission, and distribution, it could offer a blueprint for other regions facing the same pressures as the Philippine economy expands.
Sources:
https://www.sunstar.com.ph/cebu/biz-groups-back-power-price-cap
https://www.philstar.com/business/2026/09/16/2556515/our-coal-dilemma