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Wholesale electricity prices in the Visayas and Mindanao could fall by more than half from August levels after the Energy Regulatory Commission (ERC) ordered the secondary price cap in the Wholesale Electricity Spot Market (WESM) to be applied separately to each grid.
The ERC said the regional implementation, retroactive to the August 2026 billing period, was necessary after the existing system-wide mechanism failed to adequately respond to sharp price increases in the two regions.
The regulator’s simulations showed that the average WESM price in the Visayas could have declined 54% to ₱8.47 per kilowatt-hour (kWh) from ₱18.59 per kWh if the regional cap had been in place during August. In Mindanao, the average could have dropped 56% to ₱8.69 per kWh from ₱19.56 per kWh.
The reductions apply to wholesale market prices and do not mean household and business customers will automatically see bills fall by the same percentage. The actual impact on consumers will depend on each distribution utility’s exposure to the spot market, contracted power supply costs, other charges, and electricity consumption.
The ERC directed the Independent Electricity Market Operator of the Philippines (IEMOP), which administers WESM, to recalculate the August settlement and issue a revised final statement of billing by Sept. 20. Distribution utilities were instructed to reflect the recalculated charges in their customer billing.
The deadline covers the market operator’s revised settlement and does not establish a single date when all customers will receive corresponding credits.
Regional Prices Masked By Luzon
The ERC’s action followed unusually tight supply conditions in August, when the Visayas grid recorded 652 hours of red and yellow alerts while Mindanao registered 89 hours.
IEMOP data showed that the Visayas’ average spot price rose 64.9% to ₱18.59 per kWh from ₱11.29 per kWh in July. Mindanao’s average increased 88.2% to ₱19.56 per kWh from ₱10.39 per kWh.
Luzon moved in the opposite direction, with its average spot price falling 34.2% to ₱4.80 per kWh from ₱7.30 per kWh.
Under the previous rules, the secondary price cap was triggered using a rolling average covering the three major grids. The ERC said the lower prices in Luzon effectively masked the severity of the spikes in the Visayas and Mindanao.
The new arrangement allows the cap to be triggered using each grid’s own rolling average, removing the need for high prices in one region to push the system-wide average above the threshold.
“This order shows that the commission does not simply watch prices climb and wait for the next billing cycle to ask questions,” ERC chairman and CEO Francis Saturnino Juan said.
He added that the regulator acted after its data showed that the existing mechanism was failing to catch regional price spikes.
The ERC stressed that the measure was not intended to suppress legitimate market signals. “If the price signals we saw in August reflect genuine scarcity, the market should be allowed to work, and generators should be able to recover their costs,” Juan said.
He added that the commission would intervene if the high prices reflected other factors.
Cebu Groups Seek Accurate Billing
Business groups in Cebu welcomed the regional price cap but urged the ERC, IEMOP and distribution utilities to ensure that recalculated charges are accurately and transparently passed on to customers.
The Cebu Chamber of Commerce and Industry (CCCI) warned against treating unfinalized WESM charges as final and called for safeguards against double charging, delays in credits and unusually long billing periods. It also urged utilities to maintain regular meter-reading schedules.
The Mandaue Chamber of Commerce and Industry (MCCI) said high electricity costs had forced some companies to reduce expenses, retrench workers and suspend expansion and green-energy programs.
Businesses also incur additional costs when they turn to generation sets during power interruptions.
“The back up mechanisms of generation sets are extremely costly,” MCCI said.
The group warned that sustained high power costs could undermine Cebu’s appeal to foreign investors, particularly as the region prepares for the possible effects of the coming “super El Niño.”
Supply And Outages
The price-cap order comes as lawmakers and regulators examine whether supply shortages alone explain the high prices and recurring power disruptions.
Cebu Third District Rep. Karen Hope Garcia said she filed a resolution on Sept. 9 seeking a House investigation into generation outages, transmission constraints and delayed infrastructure projects.
The proposed inquiry would require the Department of Energy (DOE), ERC, National Grid Corp. of the Philippines (NGCP), and generation and distribution utilities to explain the disruptions and their economic effects.
“We need to establish the ground truth behind these blackouts,” Garcia said.
NGCP figures cited in reports on the proposal showed that the Visayas grid had recorded 94 yellow alerts and 31 red alerts as of Sept. 4.
The ERC has separately ordered a review of WESM rules and an investigation into whether generator bidding, offers and dispatch behavior during periods of high prices involved economic withholding, cartelization or other anti-competitive conduct.
NGCP was also given 30 days to assess how existing grid interconnections could be used more effectively.
The investigations will determine whether the August price spikes were primarily the result of genuine supply shortages or whether market behavior also contributed to the unusually high costs.
Source:
https://www.sunstar.com.ph/cebu/biz-groups-back-power-price-cap
https://www.sunstar.com.ph/cebu/cebu-faces-renewed-power-supply-crunch