Visayas, Mindanao spot power prices reach record highs near P20/kWh

By Sheldeen Joy Talavera, Reporter

ELECTRICITY CONSUMERS in the Visayas and Mindanao could face higher bills this month after spot market prices in both grids surged to record highs of nearly P20 per kilowatt-hour (kWh).

The Visayas and Mindanao grids remain under strain as multiple power plant outages tightened supply and triggered red and yellow alerts.

Data from the Independent Electricity Market Operator of the Philippines (IEMOP) showed the system-wide average price in the Wholesale Electricity Spot Market (WESM) increased by 11.8% to P9.29 per kWh in August from P8.31 per kWh in the previous month.

The market operator attributed the increase in spot market prices to supply constraints caused by plant outages in the Visayas and Mindanao.

Mindanao posted the highest WESM rate, surging by 88.2% to P19.56 per kWh in August from P10.39 per kWh in July as power supply fell by 7.3% to 3,045 megawatts (MW), while demand rose by 5% to 2,195 MW.

Spot prices in the Visayas also climbed to a record P18.59 per kWh in August, up 64.9% from P11.29 per kWh in the prior month. Demand inched up by 0.7% to 2,094 MW, while supply declined by 2.6% to 2,201 MW.

In contrast, Luzon’s WESM rate declined by 34.2% to P4.80 per kWh in August from P7.30 per kWh in July, as the supply margin widened. Supply slid by 3.7% to 14,493 MW, while demand fell by 10.4% to 9,650 MW.

The latest adjustments in the WESM will be reflected in consumers’ September electricity bills.

“Since we started the market, these are the highest spot prices we’ve seen in the Visayas, particularly in Mindanao,” Isidro E. Cacho, Jr., IEMOP’s vice-president for trading operations, said at a media briefing on Wednesday.

The WESM began commercial operations in Luzon in 2006. The Visayas and Mindanao grids were subsequently integrated into the WESM in 2010 and 2023, respectively.

It serves as a market where power firms can buy electricity when their long-term supply contracts fall short of meeting customer demand.

Mr. Cacho said the grids relied on more expensive power plants to fill the supply shortfall caused by offline coal-fired power facilities.

Power plant outages continue to strain the Visayas and Mindanao grids, triggering frequent yellow and red alerts. Since the start of the year, the Visayas has recorded 98 yellow and 35 red alerts, while Mindanao has logged 14 yellow and five red alerts.

“The combined impact of major generation outages and increased reliance on oil-based and battery generation contributed to the elevated market prices observed during the billing period,” Rica O. Cagnayo, trading operations for market simulation and analysis staff at IEMOP, said.

Data from IEMOP showed that coal’s share in the WESM generation mix declined to 56% from 59.1%, while the share of oil-based generation nearly doubled to 2.4% from 1.4%.

Although the secondary price cap (SPC) was triggered, it was only applied during limited intervals as it considers prices across Luzon, the Visayas, and Mindanao. Lower prices in Luzon pulled the average below the roughly P12-per-kWh threshold needed to activate the cap.

SPC is a mechanism designed to limit the price spikes in the WESM. Under the rules, the SPC is set at P7.423 per kWh and is triggered when the 72-hour average electricity price exceeds P12.413 per kWh.

“One of the things we’re currently studying is the application of the SPC on a regional level instead of evaluating it on a system-wide level because of the significant disparity in prices,” Mr. Cacho said.