WESM halt puts power prices under state control

The Energy Regulatory Commission (ERC) has suspended the Wholesale Electricity Spot Market (WESM), the country's power trading hub, to replace market-driven electricity prices with a government-set pricing system as the country grapples with fuel supply shocks.

The halt, which takes effect today under Executive Order No. 110, removes the spot market’s role in setting real-time power prices—effectively shifting pricing control from competitive bidding to administered rates during the crisis.

In place of WESM, the ERC will implement a Modified Administered Pricing mechanism, which is currently under consultation and is targeted for finalization by 1 April.

“In times of global energy disruption, our priority is clear: to protect Filipino consumers while ensuring that our power supply remains stable and reliable,” ERC Chairperson Francis Saturnino C. 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,” he added. 

According to the regulator, market prices from January and February—normally used as reference under existing rules—no longer reflect current conditions marked by geopolitical tensions and constrained fuel supply.

The proposed scheme introduces technology-specific pricing to reflect actual fuel costs and prevent distortions caused by outdated benchmarks.

Coal plants may be paid at fixed rates, while natural gas plants will be paid based on contracted prices. Renewable energy sources, such as hydro and geothermal, will be placed under administered pricing with preferential dispatch. 

Oil-based plants will be compensated based on administered prices when dispatched or contracted.

The ERC noted that the pricing overhaul is designed to contain extreme price volatility typically seen in spot markets during supply shocks, but it also limits price discovery, potentially masking real-time supply pressures.

President Ferdinand Marcos Jr. declared a national energy emergency on Tuesday evening, citing risks to the country’s energy supply and stability from the ongoing Middle East conflict.