THE Energy Regulatory Commission (ERC) has ordered the Secondary Price Cap (SPC) in the Wholesale Electricity Spot Market (WESM) to be computed and applied separately for each region following sharp power price spikes in the Visayas and Mindanao.
The new mechanism takes effect beginning with the August 2026 billing period, the ERC said Thursday evening.
Based on the regulator’s simulation, applying the SPC regionally would have reduced the average WESM price in August by 54 percent in the Visayas, from P18.59 per kilowatt-hour (kWh) to P8.47 per kWh, and by 56 percent in Mindanao, from P19.56 per kWh to P8.69 per kWh.
Under the ERC order, each grid’s own rolling average price will now determine whether the SPC threshold has been breached, instead of relying on a system-wide average.
‘The Order directs that, for the August 2026 billing period and thereafter, the SPC be computed and applied on a per-region basis, using each grid’s own rolling average price rather than the system-wide average without waiting for a grid interconnection outage, as the rules had required,’ the ERC said.
The Visayas and Mindanao experienced 652 hours of red alerts and 89 hours of yellow alerts.
Under the previous rules, the system-wide SPC failed to trigger because high prices in the Visayas and Mindanao were diluted by lower prices in Luzon, according to the ERC.
The regulator said using each grid’s rolling average price would allow the price safety mechanism to activate in the affected region without having to wait for a grid interconnection outage.
‘This Order shows that the Commission does not simply watch prices climb and wait for the next billing cycle to ask questions,’ ERC Chairman Francis Saturnino Juan said.
‘When our own data showed that the safety mechanism meant to catch these very price spikes was not catching them, because VisMin’s high prices were being masked by the low Luzon prices, we moved immediately and decisively,’ he added.
Price spikes under scrutiny
The ERC also directed the Philippine Electricity Market Corp.’s (PEMC) Market Surveillance Committee to determine whether the extraordinary prices resulted solely from supply and reserve constraints or whether the bidding behavior of generators in the affected grids warrants further scrutiny.
The regulator said the review would consider provisions of the Electric Power Industry Reform Act (Epira) covering market power abuse and anti-competitive behavior.
‘Protecting consumers does not mean abandoning the market. It means making sure the market is actually working as intended,’ Juan said.
‘If the price signals we saw in August reflect genuine scarcity, the market should be allowed to work, and generators should be allowed to recover their costs.’
‘But if they reflect anything else, the Commission will act on it. That is what it means to uphold both consumer protection and fair competition at the same time,’ he added.