TRADING HALT: ERC freezes power spot market as war rattles global fuel supply

By Francis Allan L. Angelo

MORE Electric and Power Corporation (MORE Power) CEO Roel Castro said the government’s suspension of the Wholesale Electricity Spot Market (WESM) is a proactive move to prevent electricity price spikes before they happen, as fuel costs continue to climb due to the ongoing geopolitical conflict in the Middle East.

Think of the WESM as a stock exchange for electricity – generators offer power, and prices rise or fall depending on how much is available and how much consumers need. When the market is suspended, that trading stops, and regulators step in to set the prices instead.

The Energy Regulatory Commission (ERC) ordered the suspension across the Luzon, Visayas, and Mindanao grids, taking effect at 5 a.m. on March 26, 2026, pursuant to Executive Order No. 110, Series of 2026, which declared a state of national energy emergency due to global fuel supply disruptions and rising oil prices, and in line with a Department of Energy (DOE) recommendation received the day before.

With the spot market offline, the power system will shift to Special Operating Guidelines issued by the DOE – an emergency playbook that tells grid operators which power plants to run first, in what order, and how to manage dwindling fuel stocks. Renewable sources like solar and wind get priority; fossil fuel plants are kept in reserve.

All market participants, including the Independent Electricity Market Operator of the Philippines (IEMOP) and the National Grid Corporation of the Philippines in its system operator role, have been directed to comply.

To replace market-based pricing, the ERC will implement a Modified Administered Pricing mechanism currently under stakeholder consultation, with finalization targeted by April 1, 2026.

Under ordinary rules, administered prices are computed by looking at what electricity cost during the same time slots on the four most recent comparable trading days – essentially an average of recent history.

But the ERC said those historical benchmarks, drawn from January and February prices, no longer make sense given how sharply fuel costs have risen since the Middle East conflict escalated.

Instead, the modified framework will price electricity by fuel type: coal plants get a fixed rate, natural gas plants are paid based on their supply contracts, and renewables like hydro and geothermal are prioritized and priced under administered rates.

Oil-based plants are compensated based on administered prices when they are called to run or are already under contract.

The goal, the ERC said, is to keep power plants financially viable enough to stay online, while preventing the kind of runaway price spikes that a free market would produce under current conditions.

ERC Chairperson and CEO Atty. Francis Saturnino C. Juan underscored the need for decisive action.

“In times of global energy disruption, our priority is clear: to protect Filipino consumers while ensuring that our power supply remains stable and reliable,” Juan said.

“The temporary suspension of the WESM and the implementation of a modified administered pricing mechanism are necessary measures to cushion the impact of volatile fuel prices and safeguard the integrity of our power system.”

At an energy forum in Metro Manila on March 26, ERC Executive Director Nancy Aurora Q. Fajardo outlined both the Commission’s immediate interventions and its longer-term reform agenda.

“In this moment of uncertainty, our responsibility is twofold. We act in the present — to stabilize the sector, protect consumers, and ensure reliable service. And we act for the future — through reforms that strengthen our systems, promote sustainability, and secure long-term energy resilience,” Fajardo said.

Alongside the WESM suspension, the ERC has also implemented enhanced oversight of distribution utilities, deferred certain rate adjustments, and fast-tracked approvals for power supply deals and permits to operate, particularly for solar projects capable of delivering power quickly.

IMPACT

Castro explained that the suspension differs from ordinary market interventions, which are typically applied after the fact – when regulators look back at a trading interval where prices spiked and cap what was charged. This time, the government moved first, locking in pricing before the spikes could occur.

The bill impact, he said, will not be immediate. Because of the one-month lag between when electricity is traded and when it shows up on consumer bills, households will feel the bigger hit in the next billing period, not this one.

Castro cited a DOE estimate that electricity rates could rise by PHP 2 to PHP 3 per kilowatt-hour, though he cautioned the figure is still uncertain. The problem, Castro said, is that oil prices have not yet stabilized – they are still moving, and no one can say where the ceiling is.

“Right now, all of these simulations that are being done are all guesses,” Castro said, adding that a more reliable forecast can only be made once prices begin to flatten and geopolitical signals become clearer.

He also flagged that liquefied natural gas (LNG) prices have already risen about three times, putting additional strain on power plants that run on imported gas.

The WESM suspension will remain in effect until the ERC, in consultation with the DOE, determines that conditions are suitable for the safe resumption of normal market operations.