MANILA, Philippines — Electricity rates in the country’s power spot market may increase in the coming months as demand rises due to hotter temperatures and political campaign rallies.
The Wholesale Electricity Spot Market (WESM), where electricity is traded, recorded an average price of P2.96 per kilowatt-hour (kWh) last month, the lowest in two years. However, the Independent Electricity Market Operator of the Philippines (IEMOP) cautioned that this downward trend may not continue as market prices could surge during the dry season.
“It is just a supply and demand condition. Of course, when it’s hot, we can see that there will be an increase in demand. So, therefore, prices increase during the summer months,” said Chris Warren Manalo, assistant manager at IEMOP’s trading operations department.
Electric cooperatives and distribution utilities rely on WESM to supplement their energy supply when their contracted sources are insufficient. For example, Manila Electric Co. (Meralco) obtained 28% of its energy requirements for January from WESM. The lower spot market rate that month helped offset rising costs from independent power producers and power supply agreements.
Price Trends and Election Impact
Spot market prices in February are expected to remain close to January levels due to the lingering cold weather.
“The price between January and February is not expected to differ much. I think it will be at the same level, with either a slight increase or decrease, but still within the same range,” Manalo said.
However, IEMOP trading operations head Isidro Cacho Jr. pointed out that election campaign rallies could further increase power demand during the dry season.
Data from IEMOP showed that during the 2022 presidential election season (February to May), the average power demand was 12,222 megawatts (MW), which led to an average spot market price of P6.34 per kWh over that period.
Supply Outlook for 2025
Despite the expected demand increase, Cacho remains optimistic about supply stability this year.
“Compared to last year, this year looks much better in terms of supply, which means more stable prices in the market,” he said.
With the anticipated La Niña phenomenon, Cacho also predicts that demand will be lower than last year, which was affected by El Niño.
“Generally, our demand will increase because of the summer, but compared to last year, it will possibly not reach the same peak this year,” he added.
In May 2024, WESM recorded a system-wide demand of 15,688 MW, which pushed power rates to as high as P8.22 per kWh, according to IEMOP data.
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