DOE backs regional power price cap for Visayas, Mindanao

The Department of Energy has backed the Energy Regulatory Commission’s regional application of the Secondary Price Cap, saying the measure will provide immediate protection to electricity consumers in the Visayas and Mindanao when power supply tightens and spot-market prices surge.

The regional approach is intended to prevent consumers in the two island groups from absorbing unusually high electricity costs that may not trigger safeguards under a nationwide calculation. The change is significant for households and businesses because simulations indicate the mechanism could sharply reduce wholesale electricity prices during periods of supply stress, although the actual savings on monthly bills will depend on how much electricity distribution utilities source from the spot market.

In a media release Wednesday, the DOE said the previous system-wide calculation could prevent the Secondary Price Cap, or SPC, from taking effect in regions experiencing substantially higher electricity prices.

Under the previous setup, lower prices in Luzon could pull down the national rolling average even when Wholesale Electricity Spot Market, or WESM, prices in the Visayas and Mindanao were significantly higher.

The WESM serves as the country’s spot market for electricity, where power is traded to supplement supplies covered by bilateral contracts and other procurement arrangements.

ERC simulations showed that applying the SPC on a regional basis could have reduced the average WESM price in the Visayas in August from PHP 18.59 per kilowatt-hour to PHP 8.47/kWh.

That would represent a 54% reduction in the simulated average price for the Visayas.

In Mindanao, the simulated average WESM price would have fallen from PHP 19.56/kWh to PHP 8.69/kWh.

That would amount to a 56% reduction.

“Consumers in the Visayas and Mindanao should not have to bear extraordinary electricity prices when supply becomes tight,” Energy Secretary Sharon Garin said.

“The regional price cap gives them immediate protection, and alongside this measure, we are working to strengthen power supply: bringing unavailable plants back online, building up battery reserves, and addressing recurring and prolonged outages,” she added.

The DOE cautioned that the actual effect on electricity bills will vary among consumers.

The impact will depend on each distribution utility’s exposure to the spot market and its overall mix of power-supply sources.

The Independent Electricity Market Operator of the Philippines, or IEMOP, was ordered to recalculate market settlements for August 2026 using the regional SPC mechanism.

IEMOP was also directed to issue revised Final Statement Bills by Sept. 20.

Distribution utilities were instructed to reflect the recalculated SPC-based charges promptly and accurately in consumer bills.

The regional computation will also apply to succeeding billing periods.

Beyond recalculating prices, the DOE supported the ERC’s directive for the Philippine Electricity Market Corp.’s Market Surveillance Committee to review the conduct of electricity generators during periods of unusually high prices.

The review will examine generators’ bidding, offer, and dispatch behavior to determine how market participants acted during periods of elevated electricity prices.

The scrutiny is intended to complement the price-cap mechanism by addressing not only the immediate impact of price spikes on consumers but also market conduct that could affect competition and electricity costs.

The DOE said it will continue coordinating with the ERC and other power-sector agencies and stakeholders to stabilize electricity supply.

The department said it will also continue monitoring market conduct and ensuring that recalculated charges are properly reflected in consumer bills.