The Philippine Independent Power Producers Association Inc. (PIPPA) said it supports the adoption of an alternative settlement price during market suspensions, including a fixed administered price of P6 per kilowatt-hour for coal-fired generation.
PIPPA president and executive-director Anne Estorco Montelibano said in a letter to Energy Regulatory Commission (ERC) chairman Francis Saturnino Juan her group recognizes the role of coal in ensuring stability when normal price discovery mechanisms are absent.
Montelibano said a single, fixed price for coal-fired plants is necessary to eliminate incentives for economic withholding and ensure that plants operate at maximum available capacity.
The ERC ordered the temporary suspension of Wholesale Electricity Spot Market operations across the country’s three power grids on March 26, 2026 to address supply risks and price volatility stemming from the Middle East conflict. During this period, the regulator will implement a Modified Administered Pricing Mechanism, which is under consultation with stakeholders and targeted for finalization by April 1.
The modified framework introduces a technology-specific pricing approach where coal plants may be paid at a fixed rate, natural gas plants based on contracted prices and renewable energy sources under administered pricing with preferential dispatch. Oil-based plants will be compensated based on administered prices when dispatched.
PIPPA said the proposed coal price provides a reasonable balance between maintaining reliable supply through maximized baseload dispatch and allowing generating companies to recover essential operating costs.
The group observed that the ERC seeks to align with the Department of Energy’s objective of prioritizing baseload generation to stabilize the grid under system stress. It said a fixed price promotes consistent dispatch behavior and avoids distortions from variable or interval-based pricing structures.
While the group considers the P6 per kilowatt-hour price reasonable under current conditions, it noted the rate is “highly sensitive” to fluctuations in global coal prices and foreign exchange movements.
Based on PIPPA simulations, the rate is sufficient to cover fuel and operating expenses under moderate scenarios, but at elevated coal prices of $180 per metric ton and above, the capital recovery component is effectively eliminated.
PIPPA proposed a provision for the periodic review of the administered price, especially if the Newcastle index reaches $180 per metric ton, to prevent cost under-recovery that could affect plant operations.
The group also supported retaining the administered pricing mechanism across all technologies for the reserves market while urging the elimination of negative prices from calculations.
Regarding additional compensation, PIPPA said the regulator should consider allowing the recovery of capacity-related and fixed costs—such as maintenance, market fees and transmission and ancillary services fees—in addition to fuel and variable costs.
The group said that while the administered price is a necessary tool, it must remain flexible to account for volatile fuel markets and operational realities.
