Smarter Power Deals Can Lower Electric Rates — IEMOP

By Rjay Zuriaga Castor

The Independent Electricity Market Operator of the Philippines is urging distribution utilities and electric cooperatives to adopt sound power sourcing strategies to help reduce electricity rates.

IEMOP VP-Head of Trading Operations Isidro Cacho Jr. said a utility’s supply mix and contracting approach are key factors in achieving lower power costs.

He explained that electricity prices are influenced by various elements, including market behavior, supply contracts and internal decision-making.

“We should ask our ECs or DUs what their supply mix is — how much is from the Wholesale Electricity Spot Market and how much from bilateral contracts?” he said on May 22.

“We can then see if the EC’s or DU’s contracting strategy is beneficial for that month,” he added.

WESM serves as the country’s centralized trading venue for electricity, with IEMOP overseeing its operations, scheduling, settlement and administration.

Utilities procure electricity from WESM and through bilateral contracts or private agreements with power generators or suppliers.

Cacho emphasized that WESM is meant to complement, not replace, bilateral contracts, and that utilities need a balanced strategy tailored to their operational and financial needs.

“The highs and lows of WESM prices are natural because we are a market capital,” he said.

He warned that overreliance on the spot market exposes consumers to price spikes during high demand or supply shortages.

He noted that some distribution utilities offer cheaper electricity than electric cooperatives due to stronger contracting strategies, better financial capacity and strategic management.

“Ultimately, many internal management decisions affect pricing at the consumer level,” he said.

He urged utilities to prioritize long-term power supply agreements, which offer stable pricing and are processed through a Competitive Selection Process to ensure transparency and cost-efficiency.

“In contracting, you can fix the price,” he said.

“If you are an EC or DU, a stable rate depends on your sourcing strategy.”

Cacho was in Iloilo City for a discussion on the Visayas power situation organized by MORE Power, the city’s sole distribution utility.