Under the new system, the SPC is computed using each grid’s own rolling average price instead of a nationwide average.
Energy Secretary Sharon Garin welcomed the ERC action, saying the previous system-wide mechanism could fail to capture severe price spikes in the Visayas and Mindanao because lower prices in Luzon pulled down the national rolling average, preventing the SPC from being triggered.
ERC simulation
She told an online news conference that, based on an ERC simulation, the regional SPC could reduce the average Wholesale Electricity Spot Market (WESM) price in the Visayas for August from P18.59 per kilowatt-hour (kWh) to P8.47/kWh, or by about 54 percent.
In Mindanao, she added, the average August WESM price could fall from P19.56/kWh to P8.69/kWh, or by roughly 56 percent.
The price cap will be reflected in the September billing as it takes effect during the August billing period.
“We are quite happy with this development and it would actually save people a substantial amount in their next electric bill,” she said.
She stressed that the cap would be a big help especially for the consumers in the Visayas and Mindanao who should not bear the brunt of “extraordinary electricity prices” due to limited supply.
Addressing tight supply
The pricing intervention comes as the Visayas and Mindanao grids grapple with tight electricity supply, with power plant outages contributing to red and yellow alerts.
Garin said the DOE is working to address recurring power outages by pushing for the return to service of generating units and the development of battery energy storage capacity.
The return of generating units to service has gradually improved reserve levels, although the grids remain vulnerable to additional plant outages.
In the Visayas, three of the four generating units being monitored by the DOE have returned to service, although one subsequently went on forced outage. Cebu Energy Development Corp. Unit 1, with a capacity of 82 megawatts (MW), resumed operations on Sept. 4.
Therma Visayas Inc. (TVI) Unit 2 in Toledo City, Cebu, with a capacity of 169 MW, returned to service ahead of schedule, while the 169-MW TVI Unit 1 resumed operations on Sept. 18. Unit 1, however, suffered another forced outage the following day.
Recovered capacity
The DOE said its field offices were deployed to inspect and audit the facility and coordinate with the plant operator to restore the unit to stable operation.
Panay Energy Development Corp. Unit 3 in Iloilo, with a capacity of 150 MW, remains under restoration and could resume operations by the end of October, as some of the needed parts have to be sourced from abroad.
In Mindanao, all four generating units being monitored by the DOE have returned to service. These are Therma South Inc. (TSI) Units 1 and 2, with a capacity of 150 MW each, and GNPower Kauswagan Units 2 and 3, with a capacity of 138 MW each.
The DOE said the restoration of the monitored units has recovered about 758 MW of generating capacity across the Visayas and Mindanao grids.
Possible market abuse
Beyond the price cap, the DOE said it has instructed its Legal Services Bureau to formally coordinate with the Philippine Competition Commission (PCC) and the Independent Electricity Market Operator of the Philippines (IEMOP) to determine whether generation companies engaged in market abuse or took advantage of the tight supply situation.
“Hindi po sapat ang price cap lang. I-address po natin ang ugat ng problema (Imposing a price cap is not enough. We need to address the root of the problem) through our policy measures for generation company accountability,” said Garin.
The ERC had ordered a similar investigation on Sept. 10, when it imposed the regional price cap beginning with the August billing period until further notice.
As part of the probe, the regulator directed the Philippine Electricity Market Corp. (PEMC), through its Market Surveillance Committee, to examine how generation companies in the Visayas and Mindanao bid, offered and dispatched electricity during periods when the cumulative price threshold was breached in August 2026 and thereafter.
The probe will examine whether the companies complied with electricity market rules and whether their actions involved economic withholding, collusion, cartelization or other forms of market power abuse.
Price-setting review
PEMC was directed to submit its findings and recommendations, including any proposed enforcement action, within 60 calendar days of receiving the order. The ERC may conduct a separate investigation.
The ERC said costly oil-fired plants set spot-market prices much more often in August 2026, accounting for about 78 percent of price-setting dispatch in the Visayas and 83 percent in Mindanao. In preceding months, coal and natural gas plants had more often set prices.
While the shift was consistent with tighter power supply and reserves, the ERC ordered a closer review of generators’ bids and dispatch to determine whether their actions contributed to the high prices. —Ed: Corrie S. Narisma
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