The Energy Regulatory Commission (ERC) has approved revised rules increasing the secondary price cap (SPC) in the Wholesale Electricity Spot Market (WESM), a move aimed at curbing sustained electricity price spikes while maintaining investment signals for power generators.
The adjustment ensures stable electricity prices and reliable power supply for consumers while allowing generators to operate during peak demand, preventing extreme price spikes and keeping the electricity grid stable.
Under the new rules, the SPC was raised by 19 percent to P7,423 per megawatt-hour (MWh) from P6,245 per MWh. The cap will now be applied when the 72-hour rolling average electricity price exceeds P12,413 per MWh, up from the previous trigger of P9,000 per MWh.
The SPC acts as a pre-emptive market safeguard imposed when sustained high prices breach defined cumulative thresholds. It temporarily limits spot market clearing prices while allowing eligible generators to recover verified costs during extreme supply and demand conditions.
The amendments were approved under Resolution No. 26, Series of 2025, adopted during the ERC’s recent meeting, which amended Resolution No. 07, Series of 2021, governing the pre-emptive price mitigation mechanism.
Under the revised framework, only oil-based and liquefied natural gas (LNG) power plants may recover additional compensation.
Under the revised framework, only oil-based and liquefied natural gas (LNG) power plants may recover additional compensation during periods when the SPC is in effect, and only if their verified fuel and variable operations and maintenance costs exceed the cap, while other generation technologies were excluded after the ERC found their marginal costs to be significantly lower.
In addition, the resolution retained the regional or island SPC mechanism established under a prior resolution, subject to the updated parameters.
The regional/island SPC will only be applied when the grid interconnection is on outage, and will use the same SPC value, cumulative threshold (CPT), and rolling average period applicable to the system-wide SPC.
The cap will be imposed if the CPT is breached on the system-wide rolling average on the 72nd hour and a high-voltage direct current link or island interconnection subsequently goes on outage.
“The ERC is committed to market stability and fair pricing.”
Chairperson and CEO Atty. Francis Saturnino Juan underscored the Commission’s commitment to market stability and fair pricing.
“The recalibration was necessary to ensure the price cap remains responsive to prevailing market dynamics, particularly during peak demand periods when higher-cost plants are dispatched to meet electricity demand,” Juan said.
A copy of the Resolution No. 26 may be accessed here: https://www.erc.gov.ph/Files/Render/issuance/46960.
