March spot power prices jump 23% on tighter supply

Electricity prices in the Wholesale Electricity Spot Market (WESM) spiked in March as thinning supply and rising demand squeezed the power system, raising the risk of higher bills for consumers in the coming months.

The Independent Electricity Market Operator of the Philippines (EIMOP) reported on Wednesday that the system-wide average price jumped 23 percent to P4.31 per kilowatt-hour (kWh), from P3.50 per kWh in February, as supply margins narrowed across the grid.

However, it should be noted that WESM serves as a secondary trading platform for electricity and does not solely dictate overall retail power rates, which are largely influenced by long-term supply contracts.

“System-wide average supply decreased to 19,913 megawatts (MW) while average demand increased to 13,383 MW,” IEMOP said, adding that these conditions “resulted in a tighter system supply margin of 4,654 MW, compared to 5,283 MW in February.”

The shrinking buffer between supply and demand left the market more vulnerable to price spikes, particularly as outages hit key power plants and transmission constraints limited the flow of cheaper electricity across regions.

Luzon bore the brunt of the pressure, with spot prices surging 52.5 percent to P4.10 per kWh from P2.69 per kWh, driven by stronger demand and reduced available capacity.

“Average demand increased… while average supply slightly decreased… resulting in a supply margin decline… primarily due to higher and more frequent planned and forced outages,” IEMOP said.

Across the system, outages from coal, natural gas, geothermal, and other plants cut into available supply, forcing the dispatch of more expensive generation, including oil-based plants during peak hours.

At the same time, transmission bottlenecks and limits in high-voltage direct current flows “continued to restrict the flow of lower-cost Luzon generation into the Visayas,” contributing to price disparities and keeping overall costs elevated, IEMOP said.

Meanwhile, the effective Spot Settlement Price, a key benchmark for electricity billing, climbed 18 percent to P4.78 per kWh, an increase that could still feed into higher generation charges for consumers, particularly for utilities with greater exposure to the spot market.

Even as prices in the Visayas and Mindanao eased on improved supply and imports, the system-wide increase drove total spot market trading up to P13.57 billion from P10.76 billion in February.

Compounding the pressure, the temporary suspension of the WESM in late March prompted the Energy Regulatory Commission to impose administered prices—costs that may later be recovered from consumers.

IEMOP warned that additional compensation for generators during the suspension period, if approved, “may be recovered… across three successive billing periods,” signaling further upward pressure on electricity rates.