Price cap blocks PHP 2.14 power hike

ILOILO CITY — MORE Electric and Power Corp.’s average residential electricity rate in Iloilo City fell to PHP 14.42 per kilowatt-hour (kWh) in September, as the regional implementation of the secondary price cap helped temper elevated prices on the Wholesale Electricity Spot Market (WESM).

MORE Power Chief Operating Officer Ronald Torres told a Sept. 23 press briefing that the September residential rate could have reached PHP 16.56 per kWh without the cap.

“That would have meant an additional P2.14/kWh on the average residential rate,” Torres said.

The September rate was PHP 0.03 per kWh lower than August’s PHP 14.45 per kWh.

For a household consuming 200 kWh, the month-on-month difference amounts to about PHP 6, assuming the same consumption level and the stated average rates.

The adjustment followed Energy Regulatory Commission (ERC) Order No. 2026-048 MC, which directed the regional implementation of the price cap and applied it retroactively to the August WESM billing period.

The ERC issued the order amid elevated WESM prices in the Visayas and Mindanao, where tight supply conditions and limited generation availability pushed spot-market prices higher. 

How the cap works

The secondary price cap is designed to limit consumers’ exposure to unusually high spot-market prices once a prescribed threshold is breached.

Under the ERC order, a cumulative spot-market price exceeding PHP 12.413 per kWh is capped at PHP 7.423 per kWh.

Torres said the threshold in the Visayas reached PHP 18.59 per kWh.

Under the regional approach, the cap is determined separately for the Visayas and Mindanao grids based on prevailing conditions in each region.

The affected WESM charges are then recomputed through the market settlement process.

The ERC first imposed a secondary price cap on the spot market in 2014, following a spike in WESM prices in late 2013.

What the cap does not cover

Torres stressed that the price cap does not apply to the entire electricity bill.

MORE Power sources about 27% of its electricity supply from the spot market, 72% from bilateral suppliers, and 0.6% from net-metering exports.

Because only the WESM component is subject to the cap, the reduction in spot-market charges does not translate into the same percentage reduction in a customer’s total bill.

With the cap in effect, MORE Power’s combined generation charge for September stood at PHP 7.57 per kWh, or about 52% of the total residential rate.

Without the cap, the generation charge could have reached PHP 9.33 per kWh.

The September residential rate also included PHP 2.34 per kWh in MORE Power distribution, supply, and metering (DSM) charges, PHP 1.94 per kWh for transmission and ancillary services, PHP 0.54 per kWh for system loss, and PHP 2.03 per kWh for taxes and other charges.

The commercial rate also declined slightly, from PHP 13.58 per kWh in August to PHP 13.55 per kWh in September.

The actual amount customers pay will still depend on their electricity consumption and the charges applicable during the billing period.

Retroactive, but not a refund

MORE Power clarified that the retroactive application of the cap to the August WESM supply period does not constitute a refund to customers.

The Independent Electricity Market Operator of the Philippines (IEMOP) will carry out the market recomputation under the ERC order, and distribution utilities will apply the resulting settlement to customer billing.

For MORE Power customers, the August bill was based on the earlier July WESM supply period.

The recomputation of the August WESM supply will therefore be reflected in the applicable September billing cycle.

The impact on individual consumers will vary depending on MORE Power’s WESM exposure, overall supply mix, the final IEMOP settlement, and household consumption.

Torres described the price cap as a mitigation measure amid elevated spot-market prices and the use of manual load dropping (MLD), the rotational power interruptions carried out when grid supply falls short of demand.

“The fact that ERC now is sensitive to this pricing … as long as we are experiencing this MLD, spike in spot market price, that mitigation strategy will be true,” he said.

MORE Power, which took over Iloilo City’s power distribution from Panay Electric Co. in 2020 under the franchise granted by Republic Act 11212, serves about 100,000 residential and commercial accounts in the city.