THE Energy Regulatory Commission (ERC) said it halted trading on the reserve market, where backup power is procured to help maintain a stable electricity supply, citing persistently high prices.
In a statement late Monday, the ERC said it hopes to curb high ancillary service prices and review the rules governing the market.
“This is a corrective and temporary intervention, not a retreat from the reserves market,” ERC Chairman and Chief Executive Officer Francis Saturnino C. Juan said.
Ancillary services, or power reserves, are used by the grid operator to support power transmission and maintain grid reliability.
These services are procured through the reserve market or from providers through ancillary service procurement agreements (ASPAs) with the National Grid Corp. of the Philippines (NGCP) to help stabilize the grid when electricity supply and demand are imbalanced.
The reserve market began commercial operations in January 2024.
Citing its review of market data, the ERC said prices in the reserve market have stayed “persistently high,” particularly in the Visayas, since it started full operations.
“For 2025, the reserve market cost far more than contracted ASPAs in Luzon and the Visayas, and weighed more heavily on consumers’ rates in all three regions,” the ERC said.
Tapping the reserve market cost P19.59 billion in the Visayas, adding P1.29 per kilowatt-hour (kWh) to the region’s electricity rates, compared with long-term contracts, which had a rate impact of P0.02 per kWh.
Luzon spent P24.53 billion on the reserve market, double the cost of procuring ancillary services through bilateral contracts.
In Mindanao, reserve market costs totaled P3.71 billion, lower than the P3.90 billion incurred through ASPAs.
The operations of the reserve market will be suspended “until further orders” from the ERC. During the suspension, the NGCP will source its reserve needs only from capacity available under existing contracts.
The NGCP, the Philippine Electricity Market Corp., and the Independent Electricity Market Operator of the Philippines (IEMOP) were directed to propose a redesigned reserve market within six months.
“We are suspending the market now so that it can return stronger, with better design and a reliable supply of reserves at a price consumers can bear,” Mr. Juan said.
Isidro E. Cacho, Jr., vice-president for trading operations at IEMOP, said transmission charges are expected to decline with the suspension of the reserve market.
“Effectively, transmission charges will go down because we will no longer have to pay for the reserve market,” he said at a briefing on Tuesday.
IEMOP manages the Wholesale Electricity Spot Market (WESM), where power firms can buy electricity when their long-term supply contracts fall short of meeting customer demand.
Average WESM prices system-wide increased 3.1% month on month to P7.43 per kWh in September.
Demand increased 1.8% to 14,188 megawatts (MW), following a 2.4% increase in supply to 20,209 MW.
“This supply and demand level resulted in a slightly higher average system price… driven by generation outages, grid constraints, and changes in HVDC (high-voltage direct current) power flows,” according to Rica O. Cagnayo, a trading operations for market simulation and analysis staffer at IEMOP.
On Luzon, WESM prices rose 5.7% month on month to P5.18 per kWh.
Supply increased 4.3% to 15,114 MW while demand climbed 2.6% to 9,899 MW.
In the Visayas, prices rose 5.2% to P12.42 per kWh as supply remained steady at 2,201 MW and demand edged up 0.2% to 2,099 MW.
Electricity prices in Mindanao fell 1.4% to P12.61 per kWh as demand declined 5% to 2,893 MW, while supply dipped 0.2% to 2,190 MW.
“Despite system alerts and generation outages, HVDC interconnection conditions strengthened the link between Visayas and Mindanao grids, bringing Mindanao prices closer to Visayas price levels,” Ms. Cagnayo said. — Sheldeen Joy Talavera