Electricity spot market also reels from price shock 

Spot power prices are expected to hit P9 per kilowatt hour (kWh) as conflict in the Middle East continues, prompting regulators to temporarily shut down the operations of the local electricity spot market.

The Wholesale Electricity Spot Market (WESM) across the Luzon, Visayas and Mindanao grids would be suspended effective Thursday to avoid further price surges, the Energy Regulatory Commission (ERC) said.

This came as President Marcos issued an executive order, declaring a state of national energy emergency due to oil supply disruptions and soaring prices.

WESM is an avenue where power is traded between producers and distributors to boost their supply.

In a separate statement, the Department of Energy (DOE) said that initial simulations by the WESM operator showed prices could “exceed” P9 per kWh.

The figure could translate to an increase of more than P5 per kWh from the average price of P3.50 per kWh logged in February.

Fuel alternatives

To soften the impact by up to P2 per kWh, the DOE ordered the full dispatch of indigenous sources and coal-fired power plants. Generation companies are likewise directed to explore feasible fuel alternatives.

“As a net importer of oil, coal, and liquefied natural gas, we are acting with heightened discipline to preserve power system reliability in the face of escalating global fuel market volatility,” Energy Secretary Sharon Garin said.

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Pricing mechanism

“This is a decisive intervention to protect the grid, manage fuel use responsibly, and ensure that essential electricity services remain uninterrupted,” she added.

Meanwhile, the ERC said it would implement a modified administered pricing mechanism during the market suspension. The mechanism will be finalized by April 1.

Under the proposed scheme, coal plants may be paid at a fixed rate; natural gas plants based on contracted prices; and renewable energy sources such as hydro and geothermal, under administered pricing with preferential dispatch.

Oil-based plants, meanwhile, will be compensated based on administered prices when dispatched or contracted.