The average price of electricity sold at the Wholesale Electricity Spot Market (WESM) skyrocketed by 95.5 percent in March, signaling a strain on the Philippine energy market due to rising demand and tightening power supply. The surge in prices, reported by the Independent Electricity Market Operator of the Philippines (IEMOP), the non-profit industry overseer and manager, has far-reaching implications for consumers and businesses alike, intensifying the pressure on inflation-hit households and industries.
As of March 25, the average price per kilowatt hour (kWh) across the country surged to P5.34, up from P2.73 in February. The steep increase reflects the volatile dynamics of supply and demand, which have become more pronounced in recent months.
Arjon Valencia, IEMOP corporate planning and communications manager, attributed the significant price hike to a combination of factors, particularly higher electricity demand and reduced power supply. National electricity demand rose by 5.9 percent, reaching 13,670 megawatts (MW), while total available power supply dropped by 4.4 percent to 19,611 MW, intensifying the competition for available power.
In response to the surge in prices, IEMOP activated the secondary price cap for 6.39 percent of the time during the first week of March. This mechanism, which lowers electricity prices to P6.245 per kWh when the market price exceeds P9 per kWh for over 72 hours, acts as a protective measure for consumers against extreme price volatility.
Regionally, the price spike was felt across various parts of the country. In Luzon, the average price of electricity jumped by 102.7 percent to P5.50 per kWh, while demand increased by 7.1 percent to 9,713 MW, and supply fell by 6.5 percent to 13,530 MW. In the Visayas, prices rose 95.5 percent to P5.48 per kWh, as demand grew by 2 percent and supply declined by 1.3 percent. Meanwhile, Mindanao saw a 61.3 percent price increase to P4.39 per kWh, despite a slight 2.1 percent increase in supply.
This sharp rise in electricity prices comes at a critical time, with businesses facing rising operational costs and consumers feeling the pinch in their monthly utility bills. The market volatility underscores the urgent need for more robust energy infrastructure and greater investment in renewable energy sources to stabilize the market and prevent future supply-demand imbalances.
The data provided by IEMOP covers electricity pricing up to the 25th day of March, meaning the full extent of the price impact for the month could be even more significant. As the energy market remains under strain, stakeholders, including government agencies and industry leaders, will be closely monitoring the trend, weighing whether additional regulatory measures are necessary to help stabilize pricing and safeguard consumers.
