ERC raises WESM price cap thresholds amid market shifts

MANILA — The Energy Regulatory Commission (ERC) has approved key changes to electricity price safeguards in the Wholesale Electricity Spot Market (WESM), raising both the secondary price cap and the threshold that triggers it, in a move aimed at adapting to more volatile market conditions.

Under the revised rules, the secondary price cap is now set at PHP 7,423 per megawatt-hour (MWh), a 19% increase from the previous PHP 6,245 per MWh.

The cap will only be imposed if the 72-hour rolling average spot price breaches PHP 12,413 per MWh—up from the earlier trigger point of PHP 9,000 per MWh.

These adjustments, adopted through ERC Resolution No. 26, Series of 2025, effectively delay market intervention until higher and more sustained price surges occur, allowing greater flexibility for price signals during periods of tight electricity supply.

The secondary price cap serves as a pre-emptive safeguard, automatically limiting clearing prices in the WESM during extended periods of high prices.

It aims to moderate extreme price spikes while ensuring continued grid stability when demand is elevated and supply margins are tight.

ERC Chairperson and CEO Atty. Francis Saturnino C. Juan said the update was necessary to keep pace with market trends. “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,” he said.

Under the new framework, additional compensation during capped periods is limited to oil-based and liquefied natural gas (LNG) power plants—provided their verified fuel and variable operating costs exceed the secondary price cap.

Other generation technologies were excluded after the ERC found that their marginal costs remain below the revised cap.

The Commission also retained the regional or island-specific secondary price cap mechanism, which is activated during grid or interconnection outages.

When triggered, the regional cap will use the same PHP 7,423 per MWh price ceiling and the same PHP 12,413 per MWh 72-hour rolling average threshold as the system-wide mechanism.

The ERC approved the amendments during its meeting on Nov. 26, 2025, as part of efforts to ensure WESM rules remain aligned with real-time operational and economic realities in the power sector.