ERC mulls review of WESM secondary price ceiling

MANILA, Philippines — The Energy Regulatory Commission (ERC) is moving to revisit the existing price ceiling in the spot market after a string of grid alerts pushed power prices to hit the cap repeatedly.

ERC chairman and CEO Francis Saturnino Juan said the Wholesale Electricity Spot Market (WESM)’s secondary price cap was triggered during every hour that the grid was placed under red alert status.

“A price cap is meant to be a circuit breaker, not a destination,” Juan told an energy forum organized by the Economic Journalists Association of the Philippines yesterday.

The secondary price cap serves as a preemptive safeguard in the WESM, designed to prevent sustained high prices while still allowing power generators to operate during periods of peak demand.

It is triggered once the average electricity price in the WESM breaches P12.41 per kilowatt-hour.

Earlier this month, the Luzon and Visayas grids were placed under red alert for three straight days due to sustained high electricity demand and the shutdown of several power plants.

“We need to ask whether the cap is sending the investment signal we want or whether it is muting the very signal that would attract the peaking capacity we lack,” Juan said.

It remains unclear, however, whether the ERC plans to raise the WESM secondary price cap further or take the more consequential step of removing it altogether.

WESM serves as a centralized venue for electricity trading where distribution utilities and electric cooperatives can source their energy requirements.

Amid the ongoing Middle East crisis, the Department of Energy has pushed to ramp up output from indigenous energy sources, including renewables, in the spot market.

Energy Secretary Sharon Garin underscored the urgent need to expand domestic energy sources to reduce the country’s reliance on imported fuel for power generation.

“By doing so, the Philippines can limit exposure to global price volatility, safeguard supply stability and retain greater economic value within the country,” Garin said in a speech delivered by Energy Undersecretary Felix William Fuentebella.

This year, the DOE has lined up at least three green energy auction rounds aimed at accelerating the development of renewable power projects across the country.

These include auction rounds for offshore wind, biomass and solar projects paired with battery energy storage systems.