ERC caps Visayas, Mindanao power prices retroactive to August

ILOILO CITY – The Energy Regulatory Commission has ordered the Secondary Price Cap in the Wholesale Electricity Spot Market to be computed and applied per grid rather than nationwide, retroactive to the August 2026 billing period, in a move that could cut spot market prices in the Visayas and Mindanao by more than half.

The Commission acted on its own initiative after its data showed the existing system-wide cap failed to catch price spikes that consumers in the two grids were already paying for.

The Visayas recorded 652 hours of Red and Yellow Alerts in August 2026, while Mindanao recorded 89 hours over the same month, according to the ERC.

Spot market prices during that period surged to as high as PHP 18,590 per megawatt-hour in the Visayas and PHP 19,560 per megawatt-hour in Mindanao.

Despite those spikes, the Secondary Price Cap was rarely triggered because comparatively lower prices in Luzon pulled down the national rolling average used to determine whether the cap threshold had been breached.

“This Order shows that the Commission does not simply watch prices climb and wait for the next billing cycle to ask questions,” said ERC Chairperson and CEO Atty. Francis Saturnino C. Juan. “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.”

Under the rules in force before the Order, the cap was triggered only when the rolling average price across Luzon, the Visayas, and Mindanao combined breached a set threshold.

The Commission’s review found that this system-wide computation significantly understated both the frequency and the severity of the price spikes actually being felt in the two southern grids.

The Order directs that, for the August 2026 billing period and every period after it, the cap be computed using each grid’s own rolling average price, without waiting for a grid interconnection outage as the rules had previously required.

Based on the Commission’s own simulation, applying the cap regionally would have brought the average August price down from PHP 18,590 per megawatt-hour to PHP 8,470 per megawatt-hour in the Visayas, a reduction of 54%.

In Mindanao, the same simulation would have brought the average price down from PHP 19,560 per megawatt-hour to PHP 8,690 per megawatt-hour, a reduction of 56%.

The Commission issued the Order under its oversight authority over the spot market and its mandate to protect consumers and promote competition under the Electric Power Industry Reform Act of 2001, in coordination with the Department of Energy under Executive Order No. 110, Series of 2026, which placed the country under a state of national energy emergency amid supply constraints affecting the Visayas and Mindanao grids.

The Independent Electricity Market Operator of the Philippines was directed to implement the regional cap retroactively, recalculate the August 2026 settlement, and issue the recalculated Final Statement Bill on or before Sept. 20, with the consumer payment due date moved to Sept. 28.

IEMOP was further ordered to submit a weekly monitoring report to the Commission.

The Philippine Electricity Market Corporation was given 30 days to complete a comprehensive assessment of the spot market rules, mechanisms, and procedures relevant to sustained high market prices.

Through its Market Surveillance Committee, PEMC was also ordered to conduct a focused investigation into the bidding, offer, and dispatch behavior of generation companies in the Visayas and Mindanao during the periods when prices breached the cap threshold, and to report within 60 days.

That investigation is to determine whether any economic withholding, cartelization, or other anti-competitive behavior occurred.

The National Grid Corporation of the Philippines was given 30 days to assess the optimal utilization of existing grid interconnections and submit recommendations to maximize their use.

Distribution utilities, for their part, were directed to promptly and accurately reflect the recalculated, lower cap-based charges in their billing to end-consumers.

“Our mandate under the EPIRA is unambiguous — to protect the public interest as it is affected by the rates and services of electric utilities,” Juan said. “Recalculating the Secondary Price Cap on a regional basis, and making it retroactive to August, means Visayas and Mindanao consumers will see real relief in their bills — not just an acknowledgment of their various letters to us.”

The Commission framed the market-conduct inquiry as a test of whether the extraordinary August prices were driven solely by genuine supply and reserve constraints, or whether generator bidding behavior warrants closer scrutiny under the EPIRA rules on market power abuse.

“Protecting consumers does not mean abandoning the market. It means making sure the market is actually working as intended,” Juan explained. “If the price signals we saw in August reflect genuine scarcity, the market should be allowed to work, and generators should be able 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.”

“The ERC will continue to act swiftly, decisively, and within the bounds of the law,” Juan added.