Electricity prices in the Wholesale Electricity Spot Market (WESM) dropped in the first half of 2025 on improved supply margins, growing renewable energy investments and enhancements in transmission infrastructure.
The Independent Electricity Market Operator of the Philippines (IEMOP) said in a statement Thursday the average WESM prices decreased to P4.14 per kilowatt-hour (kWh) in the first half of 2025.
This marks a 26-percent decline from P5.58 per kWh in 2024 and represents the most affordable average market price since 2020.
It translates to more competitive electricity costs for Filipino consumers and businesses, IEMOP said.
“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 IEMOP president and chief executive Richard Nethercott.
“The lower prices in the market are the result of improved efficiency in the entire industry value chain. It is a product of the collaborative efforts of all sectors, public and private,” Nethercott said.
He said the government plays a crucial role in lowering power rates. “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 said.
The Department of Energy (DOE) has introduced several policies and initiatives to make power more affordable for consumers.
It pursued the Green Energy Auction Program (GEAP), which seeks to procure renewable energy (solar, wind, hydro, geothermal, biomass, energy storage) at competitive rates.
According to IEMOP simulations, successful GEA rounds (1 to 5) could lower average electricity prices to around P3.36 per kWh in Luzon by 2029, a decrease from P4.95 per kWh. Similar reductions are projected for the Visayas and Mindanao grids, potentially saving P0.90 to P1.32 per kWh overall by 2029.
The DOE also requires distribution utilities to adopt a competitive selection process for power procurement to secure the most affordable supply and pass savings to end-users. It also urges consumers to adopt energy-saving habits, particularly during summer peak periods, to 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.
The 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.
According to IEMOP, improvements in transmission systems in recent years have reduced congestion and enabled market clearing by more inexpensive sources.
The Mindanao–Visayas Interconnection Project (MVIP), Mariveles–Hermosa 500 kV Transmission Line, Hermosa–San Jose 500 kV Transmission Line, Cebu–Negros–Panay 230 kV Backbone Project 3 (CNP3), and Cebu–Bohol 230 kV Interconnection Project helped ease transmission constraints. These grid improvements facilitated better generator performance compared to previous years, resulting in fewer outages and a better supply margin, the IEMOP said.
Since spot market prices decreased, an alternative source of low-cost supply became available, leading to a shift in contracting strategy. Distribution utilities are also contributing by consciously strategizing their participation in the market, such as sourcing supply from the market, especially when spot prices are relatively low. Utilities that manage their supply well by actively monitoring market trends are positioned to offer consumers lower power rates.
Under the competitive retail segment of the market, several programs enable eligible end-users to source their electricity from preferred retail suppliers, empowering customers with choice for better rates and services.
“Lowering electricity prices is an industry concern requiring an industry-wide collaborative response,” Nethercott said.
“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,” he said.
