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The Energy Regulatory Commission (ERC) has temporarily halted trading and settlement in the electricity reserve market to address soaring power costs, a move that could ease electricity bills in the Visayas, where reserve prices have remained significantly higher than contracted rates despite falling wholesale electricity prices.
Approved on Oct. 8, the order suspends commercial operations in the Wholesale Electricity Spot Market’s (WESM) reserve market to address persistent pricing issues and improve procurement of grid support services. These ancillary services help maintain grid stability during demand surges or power plant outages. The National Grid Corp. of the Philippines (NGCP) sources them through long-term contracts and spot market purchases, with costs passed on to consumers.
The ERC found that reserve prices remained elevated after the market began full commercial operations in January 2024. In the Visayas, the reserve market’s impact on electricity rates in 2025 was more than 60 times that of contracted ancillary service agreements.
Under the suspension, NGCP will prioritize existing contracts and procure additional capacity when needed.
(Also read: Cebu Energy Alliance Presses For Power Crisis Solutions)
A Blow to Investor Confidence?
However, extending the suspension of reserve market operations could undermine investments in battery storage and other power infrastructure, potentially worsening electricity shortages and high power costs in the Visayas, according to the Philippine Solar and Storage Energy Alliance (PSSEA).
In a position paper submitted to ERC, the group urged authorities to restore commercial dispatch and settlement in the reserve market across Luzon, Visayas, and Mindanao. PSSEA argued that the suspension under ERC Case No. 2023-002 RC distorts market signals and limits incentives to develop additional reserve capacity.
“The solution to high electricity costs affecting Visayas is to address the underlying supply and flexibility constraints in the region,” highlighted PSSEA Chair Tetchi Capellan.
Data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed that the region’s average supply margin fell to just 62 megawatts (MW) in August after accounting for reserve requirements and interregional transfers. The grid also experienced 86 hours of yellow alerts and 53 hours of red alerts that month.
PSSEA cited a 24.8-percent decline in contingency-reserve prices in July as available and contracted reserves increased, arguing that expanding supply could help ease costs.
Blackout Risks Still Loom Over the Visayas
The Visayas has endured months of power supply uncertainty, with actual power alerts occurring across the region since May. The threat of blackouts remains real and pressing, leaving the region in a precarious position with significant consequences for economic activity, business confidence, and residents’ quality of life.
NGCP placed the Visayas grid under red and yellow alerts thrice in the third week of October, as available supply fell short of projected demand. The grid had just 2,420 MW of available capacity against a peak demand of 2,586 MW.
The shortfall was compounded by forced outages at 24 generating facilities and reduced output from 17 other units, removing a combined 609.4 MW from the grid. Eight plants went offline this month alone, while some generating units have remained out of service since 2021.
The Super El Niño is poised to compound the Visayas’ power supply problems. The Department of Energy (DOE) expects national electricity demand to increase by about 900 MW by 2027, prompting the agency to simulate grid performance under extreme weather conditions.
The Visayas is projected to reach a peak demand of 3,000 MW in the fourth quarter of 2026, with consumption expected to climb by another 94 MW in 2027.
Electricity consumption typically surges during the hotter months as households and businesses increase their use of air conditioning. National peak demand reached 20,088 MW in May 2026, up from 19,212 MW a year earlier.
The looming dry spell could further tighten supply, with hydropower generation expected to fall by 60% as reduced rainfall limits water availability.
For the Visayas, these pressures add to its dependence on electricity imports from neighboring islands and recurring outages at coal-fired power plants. The DOE previously explained that some facilities required overdue repairs and maintenance after operating beyond normal limits, making shutdowns necessary to restore reliability and prevent further disruptions.
“The effort we are making right now is to concentrate and focus on what we can do for the Visayas to stand on its own. The positive aspect of that is that if the Visayas can meet its own demand, it won’t need to import—or will import less—from Luzon and Mindanao,” explained DOE Undersecretary Mario Marasigan.
All Signs Point to Local Baseload as the Power Solution
The DOE is pursuing several measures to shore up the Visayas’ electricity supply. One initiative involves 253 MW of battery storage, which would help make renewable energy more available beyond daylight hours by storing excess daytime production for use during evening demand peaks. The government is also targeting an additional megawatts from power barges and operational diesel facilities, with deployment eyed for late 2026 or early 2027.
Beyond these stopgap measures, the DOE plans to expand the region’s ability to generate electricity locally. Panay is slated to gain a total of 555 MW of new baseload capacity by 2030, with installations planned from 2028 onward. Another proposal involves 220 MW to 440 MW of gas-fired capacity by 2028.
However, restrictions on fossil-fuel development in Negros and Bohol could complicate efforts to secure dependable supply. Consumer group CERA has challenged these policies, arguing that reliable baseload generation is crucial as the Visayas confronts recurring shortages.
Negros highlights the limitations of renewables alone: despite its geothermal, solar, hydro, and biomass resources, an estimated more than 70% of its electricity still comes from imported coal and diesel power.
A BusinessMirror editorial noted that the Visayas’ growing reliance on solar power leaves a critical gap between daytime generation and evening demand, when households and businesses need electricity most. Without sufficient baseload capacity to sustain supply after sunset, the grid remains exposed to shortages. “The resulting rotational brownouts— often lasting 30 minutes to an hour—disrupt economic activity, damage sensitive equipment, and erode public confidence in the region’s infrastructure,” it stressed.
DOE Secretary Sharon Garin acknowledged that the Visayas lacks adequate baseload capacity to keep pace with rising electricity demand, leaving the region vulnerable to recurring power alerts and outages at major generating facilities.
The situation underscores a fundamental weakness in energy planning: generation capacity must be developed ahead of demand, not only when shortages become critical.
Power plants typically require around five years to build, Garin noted, although the DOE is encouraging developers to compress construction timelines to three years. This lengthy process makes planning essential, as new capacity requires financing, permits, and infrastructure before electricity can reach consumers.
A Panay News editorial pointed out that the Visayas’ recurring supply problems highlight the consequences of allowing generation capacity to lag behind demand. “If government knows that electricity infrastructure requires years of planning, financing, permitting and construction, then energy shortages should not be treated merely as emergencies to be confronted after they arrive,” it stated. “The present shortage is what happens when generating capacity and supporting infrastructure fail to keep pace with demand. Now the government is scrambling for stopgap measures.”
(Also read: Is Negros Putting Its Environment and Energy Security at Risk?)
The Visayas Cannot Afford to Wait for Power Security
The Visayas cannot afford to spend the next two years trapped in a cycle of electricity shortages, rotating brownouts and rising uncertainty. With permanent capacity additions still years away, the region’s economic ambitions are at risk of being constrained by an energy system that has failed to keep pace with growth.
As House Deputy Speaker Albee Benitez warned, “We’re seeing the consequences. The issue before us today is not simply whether [or not] we have enough electricity. The bigger question is, does Visayas have the energy foundation to sustain the growth and economic potential of our region?”
That question demands urgent action, not another round of temporary interventions. Battery storage, power barges and electricity imports may help stabilize supply in the short term, but they cannot replace sustained investment in dependable local generation. The government must accelerate project approvals, encourage new baseload capacity and coordinate with power producers to restore available plants to service. Generation planning must also account for where demand is growing to ensure supply and transmission infrastructure develop together.
More fundamentally, electricity planning must anticipate economic expansion rather than react to shortages after they emerge. New commercial centers, factories, housing developments and investments all require reliable, affordable power.
Every prolonged delay carries a cost: weaker investor confidence, disrupted businesses, mounting household burdens and lost economic opportunities. The Visayas needs a clear, time-bound strategy that translates demand forecasts into actual generating capacity.
Energy security cannot remain a promise for 2028 and beyond. The region needs decisive action now to ensure its growth is powered by a reliable supply—not held back by recurring shortages.
Sources:
https://tribune.net.ph/2026/10/20/reserve-market-freeze-threatens-power-investments
https://mb.com.ph/2026/10/20/doe-projects-surge-in-philippines-power-demand-by-2027-amid-el-nino
https://insiderph.com/doe-maps-visayas-power-buildup-eyes-healthier-grid-by-2029
https://opinion.inquirer.net/192970/the-critical-deficit-of-baseload-power-in-visayas
https://www.panaynews.net/power-shortages-are-failures-of-planning
https://businessmirror.com.ph/2026/10/05/visayas-power-woes-failure-in-planning