In September 2026 billing month, the system-wide average supply increased to 20,209 MW, a 2.4% increase from August 2026. On the other hand, the average system-wide demand rose to 14,188 MW, a 1.8% incline from the previous month. This supply demand level resulted in a system-wide average supply margin increase to 3,957 MW from 3,779 MW in August 2026.
The supply-demand conditions varied across the three regions. Luzon recorded a 376 MW improvement in supply margin, while Visayas and Mindanao posted declines of 80 MW and 117 MW, respectively. These differences were mainly influenced by outage levels, supply availability relative to demand, grid conditions, and changes in HVDC power flows. Despite the wider overall supply margin, the average market price rose by 3.1%, from 7.21 PHP/kWh in August to 7.43 PHP/kWh in September 2026.
In Luzon, average supply and demand increased by 4.3% and 2.6%, respectively. Average prices remained relatively low at 5.18 PHP/kWh from 4.90 PHP/kWh. The higher increase in supply relative to demand resulted in adequate generation availability within the region. Despite several forced and planned outages among large generating plants, Luzon recorded a supply margin of approximately 3,776 MW, which contributed to the relatively low-price level during the period.
Visayas Supply Remained Tight with Multiple Grid Alerts
The Visayas continued to experience relatively tight supply conditions during the billing period. While average supply remained unchanged, average demand increased by 0.2%. The average market price increased by 5.2%, from 11.81 PHP/kWh to 12.42 PHP/kWh. During the billing period, the System Operator (SO) declared multiple Yellow and Red Alerts, while Administered Prices (AP) were imposed due to generation deficiencies. Several large generating plants experienced outages with a combined unavailable capacity reaching 777.2 MW, resulting in tighter supply conditions.
The Luzon-Visayas HVDC interconnection operated under price-separation conditions for 77.6% of the billing period, compared with 85.92% in August 2026, while security-limited operations accounted for 73.5% of the period. Lower-priced Luzon generation continued to supply part of Visayas demand through the Leyte-Luzon HVDC link and Leyte-Cebu 230 kV corridor. However, high power transfers increased loading on critical transmission facilities, requiring transfer limitations to maintain system security.
Mindanao Reduced Supply and Reserve Margins
In Mindanao, average supply dropped by 5.0%, while average demand decreased slightly by 0.2%. Consequently, average market price declined by 1.4%, from 12.79 PHP/kWh to 12.61 PHP/kWh. During the billing period, the System Operator (SO) declared multiple Yellow and Red Alerts. Outages resulted in a combined unavailable capacity of 1,022.6 MW, resulting in tighter supply conditions and lower reserve margins during the period. Meanwhile, operating conditions on the Mindanao-Visayas HVDC interconnection improved, with free-flowing operation increasing to 92.82% of the billing period, from 91.16% in August 2026, allowing increased power transfers between the two regions. Despite the improved interconnection conditions, local generation outages and reduced supply margins remained factors affecting market conditions in Mindanao.
HVDC Interconnection Constraints Sustained Price Separation
Under normal operating conditions, the Visayas grid is supported by imports from Luzon and Mindanao through the Luzon-Visayas and Mindanao-Visayas HVDC interconnections, respectively. During the September 2026 billing period, operational constraints across both HVDC links led to more frequent price separation between trading regions. For the Luzon-Visayas HVDC, conditions associated with price separation decreased to 77.6% of the billing period, down from 85.9% in August 2026. This was primarily driven by the transmission line operating at security-limited levels for 73.5% of the time, significantly lower than 80.3% in the previous month. These constraints restricted the flow of lower-cost Luzon generation into the Visayas and contributed to sustained price separation.
Pricing Mitigation Measures Applied under ERC Directives
Given the regional supply constraints observed during the period, several measures have been implemented or are expected to improve market outcomes and mitigate customer exposure to high electricity prices. Under ERC Case No. 2026-048 MC, the regional application of the Secondary Price Cap (SPC) was triggered following a breach of the regional Cumulative Price Threshold (CPT) of 12.431 PHP/kWh. In addition, ERC Case No. 2025-009 RM, dated 13 August 2026, introduced the interim suspension of the Load-Revenue Transfer Allocation (LRTA) under specified HVDC-related price separation conditions, thereby reducing the settlement impact of substantial regional price disparities. This measure took effect beginning with the September 2026 billing period, covering 26 August to 25 September 2026.
Several special pricing conditions were issued during the billing period. Administered Pricing (AP) was imposed in the Visayas and Mindanao as a result of market intervention triggered by the implementation of the Market Load Drop (MLD) mechanism due to generation deficiency, tagging 18.72% (Visayas) and 0.68% (Mindanao) of trading intervals. Meanwhile, Price Substitution Methodology (PSM) was applied for 1.52% (Luzon), 1.29% (Visayas), and 1.30% (Mindanao) due to the congestion and price separation, while sustained high market prices in Visayas and Mindanao resulted in the application of Secondary Price Cap (SEC) for 33.55% and 47.31% of trading intervals, respectively.
Several generating units across all grids experience outages throughout the month. In Luzon, forced outages across various technologies have a highest daily cumulative outage of 4,041 MW, mostly from Hydro, Coal, and Natural Gas, while planned outages across various technologies have a highest daily cumulative outage of 1,268 MW. In the Visayas, forced outages from various technologies have a highest daily cumulative outage of 964 MW, mostly from Coal, with planned outages of 96 MW from Coal. These outage conditions increased Visayas’ reliance on imports from Luzon and Mindanao to meet its local demand. In Mindanao, forced outages have a highest daily cumulative outage of 1,066 MW and 685 MW for planned outages from Coal.
Renewable Energy Share Increased
Moreover, in terms of system-wide generation mix, renewable energy (RE) accounted for 28% of total generation in September 2026. Coal-fired generation decreased its share from 56.0% to 51.7%, while Natural Gas generation slightly increased from 16% to 17%. Oil-based generation remained stable at 2.4%. Hydro generation increased from 9.5% to 11.3%. Solar generation inclined from 4.6% to 5.3%, while Geothermal generation marginally increased from 8.2% to 8.3%. Wind generation declined from 1.2% to 0.9%, while Pump Storage Hydro (PSH) generation decreased from 0.7% to 0.6%. Biomass and Battery Energy Storage Systems (BESS) remained unchanged at 1.0% and 0.2%, respectively. Integrated Renewable Energy Storage System (IRESS) rose from 1.0% to 1.7%.
Spot Market Volume Decreased
Energy spot market volume declined in September 2026, accounting for 12.2% of total traded quantity from 13.4% in August 2026. Correspondingly, the total trading amount increased from PHP 13.94 billion PHP to PHP 26.62 billion, driven by a higher Effective Spot Settlement Price (ESSP), which rose from PHP 8.48/kWh to PHP 9.32/kWh, despite the decrease in spot market volume from 1,319 GWh to 1,226 GWh.
Reserve/Ancillary Services Market
In the reserve market, reserve prices in Luzon posted mixed movements. Regulation Down and Regulation Up Reserve prices declined significantly by 66.46% and 58.49%, respectively. Conversely, Contingency and Dispatchable Reserve prices increased by 2.91% and 41.73%, respectively.
In the Visayas, reserve price movements varied. Regulation Down Reserve prices marginally increased by 0.57%, while Regulation Up Reserve prices declined by 4.30%. Meanwhile, Contingency and Dispatchable Reserve prices increased by 6.03% and 64.57%, respectively.
In Mindanao, reserve prices increased across all reserve categories. Regulation Down Reserve prices marginally increased by 1.62%, while Regulation Up Reserve prices surged by 18.87%. Contingency Reserve prices inclined by 53.37%, and Dispatchable Reserve prices posted the largest increase by 75.14%.
Reserve Market Suspension Effective 14 October 2026
Following recent developments in the reserve market, and pursuant to ERC Case No. 2023-002 RC, promulgated on 12 October 2026, the commercial dispatch and settlement of the Reserve Market will be suspended effective 14 October 2026 at trading interval 0005H pending a review of the Reserve Market design and pricing framework. During the suspension, reserve requirements will continue to be sourced through existing Ancillary Service Procurement Agreements (ASPAs) and other designated ancillary service arrangements to support the continued reliability and security of the power system.
“Recent regulatory measures have played an important role in addressing elevated electricity prices, particularly in the Visayas and Mindanao. The regional application of the Secondary Price Cap has helped limit the impact of sustained high market prices, while the forthcoming suspension of the Reserve Market is intended to address elevated reserve-related costs without compromising the reliability of the power system. These developments reflect continuing efforts to balance electricity affordability, reliable supply, and efficient market operations for the benefit of consumers,” IEMOP said.
