WESM restart restores market-driven power prices

Market-driven electricity pricing is set to return as the Wholesale Electricity Spot Market (WESM) resumes operations nationwide starting in May for more transparent and efficient price formation following weeks of intervention.

The Energy Regulatory Commission (ERC) said Friday that lifting the suspension will allow electricity prices to better reflect actual supply and demand conditions, while preventing distortions seen under temporary pricing controls.

“After a thorough review, the Commission has concluded that resuming normal WESM operations is the most suitable course of action at this juncture. This will allow electricity prices to more accurately mirror current market conditions while maintaining consumer protection safeguards,” ERC Chairperson and CEO Atty. Francis Saturnino C. Juan said.

The WESM, the country’s trading floor for electricity where generators sell power and utilities, and suppliers procure supply, will once again operate under competitive market forces. Prices are expected to move in line with generator offers, transmission constraints, and real-time demand.

Trading had been halted on 26 March as global fuel prices surged and supply uncertainties intensified due to conflict in the Middle East.

In response, authorities imposed the Department of Energy's Special Operating Guidelines, prioritizing generating units to conserve fuel and cushion price shocks.

With WESM back online, such global cost movements may again feed more directly into domestic electricity prices, particularly during periods of tight supply. 

The ERC cautioned against prolonged reliance on intervention measures, noting their potential unintended effects.

“We observed that although the temporary pricing mechanism was effective in addressing the emergency, prolonging its use could lead to unintended charges in market settlements,” he added.

Under its mandate in the Electric Power Industry Reform Act of 2001, the ERC said the resumption would strengthen transparency and ensure non-discriminatory pricing in the power sector.