Electricity price controls in the power spot market will now activate at higher levels after the Energy Regulatory Commission (ERC) approved revisions to the rules governing the secondary price cap in the Wholesale Electricity Spot Market (WESM).

The changes raise both the price ceiling and the conditions that trigger it, which effectively recalibrate when market intervention kicks in during periods of prolonged price volatility. Under the revised rules, the secondary price cap is set at PHP 7,423 per megawatt-hour (MWh), up 19% from the previous PHP 6,245 per MWh.

More significantly, the cap will only take effect if the 72-hour rolling average electricity price breaches PHP 12,413 per MWh, replacing the earlier trigger level of PHP 9,000 per MWh. This means sustained high prices must persist longer and reach higher levels before the safeguard is imposed.

The secondary price cap functions as a pre-emptive mechanism, temporarily limiting spot market clearing prices once cumulative thresholds are breached. It is intended to moderate extreme price spikes while allowing the power grid to remain stable during periods of tight supply and elevated demand.

Under the updated framework, only oil-based and liquefied natural gas (LNG) power plants may receive additional compensation while the cap is in effect, and only when their verified fuel and variable operating costs exceed the price ceiling. Other generation technologies were excluded after the ERC determined that their marginal costs are significantly lower.

The Commission also maintained the regional or island secondary price cap mechanism, which applies during grid or interconnection outages. When triggered, the regional cap will follow the same price level, cumulative threshold, and 72-hour rolling average period used for the system-wide mechanism.

The amendments were approved through Resolution No. 26, Series of 2025, adopted during the ERC’s meeting on November 26, 2025, updating the rules on the pre-emptive price mitigation mechanism in the spot market.

ERC Chairperson and CEO Atty. Francis Saturnino C. Juan said the adjustments were needed to keep the price cap aligned with current market conditions. “The recalibration was necessary to ensure the price cap remains responsive to prevailing market dynamics, particularly during peak demand periods when higher-cost plants are dispatched to meet electricity demand,” he said.

As electricity demand continues to fluctuate, will the higher thresholds change how often price controls are activated in the power spot market?

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