INSIDER VIEW | WESM suspension is a symbolic fix, not a real solution

The government often responds to rising power prices by proposing to suspend the Wholesale Electricity Spot Market (WESM), hoping this will address the issue. But suspending WESM does not tackle the core problem and serves more as a symbolic gesture than a practical energy policy.

When fuel prices are volatile and supply is tight, the WESM provides a crucial price signal that reflects real costs and system stress.

This uncomfortable signal is valuable—it reveals scarcity and indicates whether the country has enough supply, reserves, and flexibility. Removing that signal does not protect the public; it blinds the sector.

Market reality

Let us be honest about what WESM is and what it is not. The WESM is not perfect. It can be volatile. It may be vulnerable if regulation is not robust. It can result in politically challenging prices.

However, it remains the Philippines’ closest proxy for real-time electricity value. If the government suspends it whenever prices spike, it is not addressing the problem. This approach risks deflecting attention from the issue rather than resolving it.

Furthermore, the perceived consumer relief may not be as effective as intended.

Only about 10 percent of the Philippine electricity market is directly exposed to WESM. The rest operates under supply agreements with pricing formulas that already account for fuel and exchange rates.

Suspending WESM therefore leaves most transactions—and cost pressures—unchanged. High fuel prices and a weak peso continue to affect consumers regardless.

Guido Alfredo A. Delgado

"Suspending the WESM will not lower the real cost of electricity, nor shield most consumers from higher prices, nor fix supply insecurity. Instead, it risks undermining the long-term credibility of the power market."

Market confidence

What suspending WESM may do is affect confidence in the power sector. Electricity markets depend on rules rather than sentiment. Investors commit billions of pesos with the understanding that the regulatory framework, however imperfect, will remain stable.

If the market is suspended when its signal becomes uncomfortable, it may suggest to investors that policy risk is as significant as fuel risk. This poses challenges for a country in need of new generation, new reserves, and long-term energy security.

A recent article suggested ways to address the rise in electricity prices (https://insiderph.com/insider-view-a-financing-fix-for-the-power-price-surge). The government could capitalize the increase in electricity costs and amortize them over a long period, say 15 years.

Practical fix

The math is straightforward. The proposal translates to roughly P0.026 per kWh—only about P5 per month for a household consuming 200 kWh, instead of almost P1.00 per kWh, a 97-percent reduction in cost impact.

Suspending the WESM will not lower the real cost of electricity, nor shield most consumers from higher prices, nor fix supply insecurity.

Instead, it risks undermining the long-term credibility of the power market for fleeting political optics. 

If we sacrifice market integrity now, we all pay the price later: less investment, weaker supply, and greater vulnerability. The solution is not to hide from the truth—it is to confront it with real, lasting reforms.