ERC clarifies WESM price rules amid suspension

The Energy Regulatory Commission has issued clarificatory guidelines on the implementation of the Modified Administered Price in the Wholesale Electricity Spot Market to help stabilize electricity costs during market suspension.

The ERC said Resolution No. 14, Series of 2026 was issued in line with the government’s response to the State of National Energy Emergency under Executive Order No. 110.

In a statement dated May 8, 2026, the commission said the resolution addresses operational and settlement concerns raised by industry stakeholders during the recent market suspension.

The ERC said the measure is meant to ensure that consumer protection remains central in the implementation of the Modified Administered Price, or MAP.

The MAP is a pricing mechanism used in the WESM during abnormal market conditions to help prevent sharp and volatile electricity price movements.

The WESM serves as the trading platform where electricity is bought and sold, allowing supply and demand conditions to influence market prices.

At the core of the ERC resolution is a one-time Bilateral Contract Quantity redeclaration mechanism for coal-fired power plants that were available but were constrained or curtailed due to System Operator instructions.

The Bilateral Contract Quantity, or BCQ, refers to the volume of electricity covered by supply contracts between generators and their counterparties.

The ERC said the mechanism allows affected generators and their counterparties to realign contracted energy volumes with actual dispatch conditions during the suspension period.

However, the commission said any exposure of the load arising from the redeclaration shall be borne by the coal-fired power plant in favor of its counterparty.

The ERC also maintained the existing settlement treatment for the Kalayaan Pump Storage Power Plant, or KPSPP.

Transactions involving KPSPP will be settled at customer administered price, or AP.

The commission also authorized KPSPP to claim additional compensation for pumping operations undertaken upon instruction of the National Grid Corporation of the Philippines.

The ERC said the move recognizes KPSPP’s role in maintaining grid stability and ensures that system support services are fairly compensated.

Pump storage facilities help support the grid by storing energy through pumping operations and releasing electricity when needed, particularly during periods of high demand or supply constraints.

ERC Chairperson and CEO Atty. Francis Saturnino C. Juan said the resolution seeks to balance market stability and consumer protection.

“This Resolution ensures that extraordinary market conditions are managed in a fair, transparent, and orderly manner. By clarifying settlement rules and addressing unintended cost exposures, we are protecting consumers from unnecessary price volatility while preserving the integrity of the electricity market,” Chairperson Juan said.

The ERC said the guidelines provide regulatory clarity on how energy transactions will be treated during market disruptions.

The commission said the rules are expected to improve billing accuracy and reduce uncertainty in settlements.

The ERC said the measure ultimately supports more stable electricity pricing for end-users.

The commission said the guidelines also help mitigate sharp and unpredictable increases in electricity rates by preventing undue cost exposures of customers in the market.

It said proper cost allocation reduces the likelihood that inefficiencies or market distortions will be passed on to consumers through electricity bills.

For generation companies, particularly coal-fired power plants, the BCQ redeclaration mechanism offers a practical and fair solution when plants are unable to dispatch because of system constraints.

The ERC said the mechanism ensures that financial exposures are managed through contractual arrangements rather than distorted market outcomes.

The commission said Resolution No. 14 forms part of its broader strategy to safeguard consumers, stabilize electricity prices, and ensure the continued reliability of the power system amid global energy uncertainties.