Electricity prices seen to spike in April

BAGUIO CITY, Philippines, March 22 ------ Electricity prices at the country’s spot market may rise by up to P4 per kilowatt-hour (kWh) next month due to the combined impact of the Middle East war and higher summer demand, a top energy official said.

Energy Regulatory Commission (ERC) chairman and CEO Francis Saturnino Juan indicated a potential hike of “P2 to P4 per kWh” if the global oil crisis persists while electricity demand rises during the dry season. “This will be the impact: the marginal plant will be running on oil, so if the price of oil is like this, then this will be the kind of offers they will submit,” Juan said on the sidelines of the 2026 Philippine Electric Power Industry Forum.

The estimates were based on the simulations conducted by the Independent Electricity Market Operator of the Philippines, which operates the Wholesale Electricity Spot Market (WESM). If the upper end of the estimate is reached, it would more than double the average system-wide WESM price, which only settled at P3.50 per kWh in February.

Juan, however, noted that the upward movement in WESM prices would not necessarily translate to higher power generation charges, which usually account for more than half of consumer power bills. “This is because it depends on the power utilities’ level of exposure to WESM. That’s why we also monitor how exposed they are,” he said. WESM is the centralized venue for electricity trading where power utilities like Meralco can source their energy requirements. “If their WESM exposure is large and the increases hit that (price) level, then they will bear the brunt of it,” Juan said.

The Philippines saw the biggest single jump in local fuel prices this week, as the US-Israel war on Iran, which broke out late in February, disrupted supply deliveries, particularly oil and gas shipments, through the Strait of Hormuz. For this month, the adjustment in electricity rates does not yet reflect the impact of the Middle East war, as charges only cover supply from February billings. Amid a looming spike in power rates, the ERC chief assured the public that regulatory safeguards such as the secondary price cap would be in place. The secondary price cap refers to the preemptive mitigating measure imposed on the WESM to prevent sustained high prices while allowing generation companies to continue operating during peak demand.

Source: philstar.com