“To understand why prices are lower in the WESM, at least for the first half of the year, we need to appreciate the contribution of each segment in the electric power industry value chain,” said Atty. Richard J. Nethercott, IEMOP President and CEO, as regards the lower clearing prices in the WESM.
“The lower prices in the market is the result of improved efficiency in the entire industry value chain. It is a product of the collobarative efforts of all sectors, public and private,” Nethercott added.
Electricity prices in the Wholesale Electricity Spot Market (WESM) have dropped significantly in the first half of 2025, thanks to improved supply margins, growing renewable energy investments, and continued enhancements in transmission infrastructure.
From an average of PhP5.58 per kilowatt-hour (kWh) in 2024, WESM prices decreased to PhP 4.14/kWh in the first half of 2025 — a 26% decline — marking the most affordable average market price since 2020. This price drop translates to more competitive electricity costs for Filipino consumers and businesses.
“It begins with government. As in any other industry, government plays an essential role in crafting the necessary policy and legal framework to guide private stakeholders in their strategic decision making. Even more so in the Philippine electric power industry whose structure is “almost” completely private,” Nethercott explained.
In line with President Marcos’ vision of lowering electricity prices, the Department of Energy (DOE) has since introduced several policies and initiatives focused on making power more affordable for consumers. Among others, the DOE actively pursued the following:
- Green Energy Auction Program (GEAP). The DOE’s Green Energy Auction rounds seek to procure renewable energy (solar, wind, hydro, geothermal, biomass, energy storage) at competitive rates. According to IEMOP simulations, successful GEA rounds (1–5) could lower average electricity prices to around ₱3.36/kWh in Luzon by 2029 (from ₱4.95/kWh), and similar reductions in Visayas and Mindanao grids—saving ₱0.90–₱1.32/kWh overall by 2029.
- Competitive Procurement. The DOE also requires that distribution utilities adopt a competitive selection process for power procurement (“least-cost sourcing”) to secure the most affordable power supply and pass those savings to end-users.
- Promoting Energy Efficiency & Demand-Side Management (DSM). The DOE urges consumers to adopt energy-saving habits—particularly during summer peak periods (e.g. 11 AM–3 PM and 6–9 PM)—to help ease grid congestion and reduce spot-market price spikes. Commercial, government, and industrial sectors are encouraged to reschedule high-energy operations and implement energy audits and building management systems to reduce overall consumption and peak load strain.
- Expanding Transmission Infrastructure. DOE aims to reduce congestion costs and enable cheaper power sharing between regions by requiring the transmission services provider to fast-track projects under the approved Transmission Development Plan.
- Libelarization of RE facility ownership. On 15 November 2022, the DOE, through DOE Circular No. 2022-11-0034, amended Section 19 of the Implementing Rules and Regulations (IRR) of the Renewable Energy Act of 2008 (RA 9513) to exempt the development and operation of renewable energy projects from the forty percent (40%) foreign equity limitation. This reform aims to boost investments in the renewable energy sector and help the Philippines meet its clean energy targets.
- Implementation of Market-Based Programs. Through various department circulars, the DOE has since spearheaded operationalization of market program such as WESM Mindanao, Ancillary Services/ Reserve Market, Green Energy Option Program (GEOP) under the Retail market and the Renewable Energy Market.
Equally important, the Energy Regulatory Commission (ERC) implemented several key regulations aimed at lowering electricity prices for consumers, one of which is the Omnibus Rules for Customer Choice Programs in the Retail Market (ERC Resolution No. 13, Series of 2024). The Omnibus Retail Rules was issued by the ERC to consolidate and update the guidelines governing various consumer choice programs in the Philippine electricity market. These rules aim to empower consumers, enhance market competition, and ensure transparent and fair practices among retail electricity suppliers (RES). One of the key features under the Omnibus Retail Rules is the Retail Aggregation Program (RAP). RAP allows multiple electricity consumers within the same distribution utility franchise area to pool their power demand. By aggregating their consumption, these consumers can collectively meet the 500-kilowatt threshold required to participate in the Retail Competition and Open Access (RCOA), enabling them to negotiate directly with licensed retail electricity suppliers for more competitive rates and favorable contract terms.
With government setting the tone, the private sector responded positively as shown by increased available supply capacities, enhanced transmission infrastructure, and over-all improved efficiency of the distribution and supply sectors.
Generation
Policy issuances paved the way for the development of new technologies, such as solar plants and energy storage systems, with additional conventional capacity aimed at boosting the energy supply situation of the country.
In the WESM, significant improvements were observed with the availability of existing generating units which also contributed to the supply margin. While oil-based plants contributed less than 1% in the system-wide generation mix, the overall RE capacity increased by approximately 1,000 MW which considers GEAP 1 & 2 registered capacities. These capacities underwent priority dispatching and displaced higher-priced plants through the merit ordering process.
In 2025, most natural gas plants were offering their maximum capacities while a few remain partially derated. This resulted in an increasing trend with an average capacity reaching 3,674 MW for natural gas. Furthermore, the minimum and maximum available capacity for this technology type increased to 3,404 MW and 4,121 MW, respectively.
The system-wide average demand in the first half of 2025 grew by 1.83% compared to the first half of 2024. This demand rise was comfortably met by (highest on record) average system-wide supply margin reaching 6,916 MW from 5,626 MW back in 2024.
These figures imply increased reliability of generation companies resulting to an improved and more reliable supply that can be used by the grid.
Transmission
The improvements in the transmission systems in the recent years resulted in reduced congestion and market clearing by more inexpensive sources. Notably, the following transmission projects helped ease transmission constraints:
- Mindanao–Visayas Interconnection Project (MVIP) last May 2023
- Mariveles–Hermosa 500 kV Transmission Line last April 2022
- Hermosa–San Jose 500 kV Transmission Line last June 2023
- Cebu–Negros–Panay 230 kV Backbone Project 3 (CNP3) last April 2024
- Cebu–Bohol 230 kV Interconnection Project last September 2024
These grid improvements facilitated better generator performance in comparison to previous years and resulted in less outages and a better supply margin.
Distribution
Since the spot market prices decreased, an alternative source of low-cost supply became available leading to a shift in contracting strategy. DUs are also contributing by consciously strategizing their participation in the market such as getting supply from market especially in times when the spot prices are relatively low. Utilities that manage their supply sourcing well by remaining active in monitoring market trends are positioned to offer consumers lower power rates.
Retail Supply
Under the competitive retail segment of the market, several programs enable eligible end users to source their electricity from preferred retail suppliers, thus, empowering customers’ power of choice for better rates and better services:
- RCOA and RAP- 500kW average peak demand and above
- GEOP- 100kW average peak demand and above
The implementation of the RAP together with the recent increased level of customer switching to the Retail Market resulted in an increasing trend in MWh load consumption in 2025 as compared to the previous years. The Retail Market share as of June 2025 is 22.26%, relative to 21.27% back in 2024. The first RAP switch was facilitated by IEMOP in February 2025.
WESM Developments
Consistent with IEMOP’s mission to operate efficient, competitive, and transparent electricity markets, the following market developments have since been implemented in the WESM:
- WESM Mindanao. Mindanao was integrated into the WESM on 26 January 2023 enabling energy trading across Luzon, Visayas and Mindanao. Coupled with Mindanao-Visayas Interconnection Project (MVIP) energized in January 2024, the export of excess supply of energy from Mindanao to Visayas via the submarine high voltage line enabled more cost-efficient power to reach consumers. Following the establishment of WESM in the region, the retail market was then opened in 2024 enabling eligible end-users in Mindanao to source their electricity from preferred retail electricity suppliers.
- Ancillary Services/ Reserve Market. The trading of reserves was integrated into the WESM on 26 January 2024 making WESM a co-optimized energy and reserve market, enabling the system to meet its reserve requirements. Reserves (or Ancillary Services) refer to services necessary to support the transmission of capacity and energy from resources to loads. These are “stand-by” capacities scheduled by the System Operator to ensure a stable and reliable operation of the grid.
- Green Energy Option Program (GEOP). Section 9 of the RE Act empowered and accelerated customers’ power of choice through the implementation of the GEOP. Under this policy, electricity end-users have the option to source their electricity supply from their preferred RE Power Suppliers. Currently, there is a total of 693 registered GEOP end-users in the country.
- Renewable Energy Market (REM). The REM, established under the Renewable Energy Act of 2008, serves as the platform where RECs—each representing one (1) MWh of electricity from eligible renewable energy sources—are traded to enable mandated participants, such as distribution utilities and retail suppliers, meet their compliance obligations under the Renewable Portfolio Standards (RPS). The DOE announced the full commercial operations of REM on 26 December 2024 and as of now, there are 50.5 million RECs issued in the registry covering the periods 2018 to 2025.
In summary, these developments in all sectors of the electricity value chain contributed to lowering of electricity prices; every segment of the power sector is seen as having supported the goal of making electricity prices more affordable to consumers.
“Lowering electricity prices is an industry concern requiring an industry wide collaborative response. The problem cuts across every link in the industry value chain as the industry operates under a system of pass-on charging. And as shown by market results in the last six months, a collective effort of all stakeholders can indeed lower market prices.”, Nethercott concluded.
