The Energy Regulatory Commission (ERC) has implemented a modified administered pricing framework for the Wholesale Electricity Spot Market (WESM), introducing a fixed coal benchmark and revised settlement rules across generation technologies following the nationwide suspension of spot market operations.

Under ERC Resolution No. 10, Series of 2026, coal-fired power plants are now subject to a fixed administered price of PHP 6,000 per megawatt-hour (MWh), intended to stabilize generation costs and ensure prioritization of dispatchable capacity.

The adjustment took effect on March 26, coinciding with the suspension of WESM dispatch at interval 00:05H, as authorities moved to stabilize electricity prices and safeguard supply adequacy amid volatile fuel markets.

The policy change comes in the context of a declared national energy emergency by President Ferdinand Marcos Jr., driven by sustained increases in global fuel costs and geopolitical tensions in the Middle East. The Department of Energy (DOE) earlier recommended the suspension of WESM operations as part of emergency market interventions.

Other technologies are governed by differentiated settlement rules. Solar, wind, run-of-river hydro, biomass, geothermal, and impounding hydro plants will be compensated using administered prices derived from average market levels over the four weeks prior to the suspension, subject to adjustments aimed at ensuring reasonable cost recovery. 

These facilities are not eligible for additional compensation under the current framework, the ERC said.

Oil-based, natural gas, battery energy storage systems (BESS), and pumped-storage hydro plants will continue under the existing administered pricing methodology, with negative settlement values set to zero. However, these generators may file for additional compensation claims to recover fuel and operational costs not fully covered by administered rates.

To mitigate consumer impact, the ERC said approved cost adjustments exceeding PHP 0.005 per kilowatt-hour will be recovered in equal installments over three consecutive billing periods.

The reserve market mechanism remains unchanged, with the regulator noting that prevailing reserve pricing continues to reflect system conditions.

“We will continue to closely monitor market conditions and implement timely measures to protect consumers while ensuring the stability and adequacy of our power supply,” ERC Chairperson and CEO Atty. Francis Saturnino C. Juan said.

The modified administered pricing regime will remain in effect until the ERC lifts the WESM suspension.

The intervention effectively places the Philippine spot market under a controlled pricing environment at a time of elevated global fuel uncertainty, raising key questions on how long emergency market settings can remain without distorting investment signals in generation and storage capacity.

How should regulators balance short-term price stability with long-term market efficiency and investment incentives in the Philippine power sector under emergency market conditions?

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