Philippines suspends spot power sales as Iran war sends prices soaring

The Philippines suspended electricity sales on the Wholesale Electricity Spot Market until further notice due to fuel supply risks and price volatility caused by the Iran war.

According to a report of the government's Philippine News Agency (PNA), the Energy Regulatory Commission (ERC) has announced a temporary suspension of the Wholesale Electricity Spot Market (WESM) operations across the Luzon, Visayas, and Mindanao grids, effective Thursday, March 26, 2026.

The suspension - a rare state intervention in one of the few Asian markets where electricity bills are linked to market prices - was ordered under a decree that declared a state of national energy emergency to deal with the fallout from the war, including disruptions to fuel procurement.

The ERC said it expects to finalize a modified pricing scheme by Wednesday.

"The ERC determined that immediate regulatory action is necessary to ensure the adequacy, stability, and reliability of the country’s power supply,” a statement of the ERC reads.

This measure follows Executive Order 110, which declared a state of national energy emergency due to global oil supply disruptions and the ongoing conflict in the Middle East.

The PNA said the key details regarding the suspension include:

Operating guidelines: During this period, the system will follow Special Operating Guidelines (SOG) from the Department of Energy (DOE), prioritizing renewable energy dispatch and fuel conservation.

Pricing mechanism: The ERC will implement a Modified Administered Pricing (AP) Mechanism, currently under consultation and targeted for finalization by April 1, 2026. This technology-specific approach aims to reflect current fuel costs more accurately than historical data from January and February.

Compliance: All market participants, including the Independent Electricity Market Operator of the Philippines (IEMOP) and the National Grid Corporation of the Philippines–System Operator (NGCP-SO), are directed to comply with the order.

According to ERC Chairperson and CEO Francis Saturnino Juan, these measures are necessary to protect consumers from price spikes and ensure the stability and reliability of the power system during this global energy disruption.

“In times of global energy disruption, our priority is clear: to protect Filipino consumers while ensuring that our power supply remains stable and reliable. The temporary suspension of the WESM and the implementation of a modified administered pricing mechanism are necessary measures to cushion the impact of volatile fuel prices and safeguard the integrity of our power system,” Juan said. 

DATA ON ELECTRICITY PRICES

Data from the Independent IEMOP showed average spot power prices in the Philippines jumped 58% this month after the war launched by the U.S. and Israel on February 28 rattled fuel supplies.

Prices in Mindanao and Visayas territories have nearly doubled, while those in more populous Luzon rose 42%.

The suspension follows through on plans flagged by Energy Secretary Sharon Garin in an interview with Reuters on March 13, in which she said the government would intervene in the market to stop a projected surge in power bills.

Power tariffs in the archipelago of more than 100 million people are the highest in the region after Singapore.

A modified pricing scheme was being adopted as historical market prices no longer "reflect current conditions marked by geopolitical tensions and fuel supply constraints," the commission said.

During the suspension, the power system will operate under guidelines that aim to prioritise renewable energy and conserve critical fuel inventories, it said.

"Coal plants may be paid at a fixed rate, natural gas plants based on contracted prices," the commission said in a statement, adding that the market will remain suspended until the conditions are suitable for normal operations.

Paraluman News with Sudarshan Varadhan; Editing by Edwina Gibbs and William Mallard/Reuters