The Energy Regulatory Commission has drafted a resolution to lower the price ceiling for power reserves traded in the wholesale electricity spot market. The new ceiling would be set at P9 per kilowatt‑hour, equivalent to P9,000 per megawatt‑hour.
This level represents a significant reduction from the interim cap of P25 per kilowatt‑hour (P25,000 per megawatt‑hour) that has been in place since early 2024. The commission aims to make reserve procurement more affordable for consumers.
The reserve market, introduced in January 2024, allows the system operator to purchase backup power capacity from the spot market to satisfy reserve requirements. These ancillary services serve as a buffer that can be dispatched when supply and demand shift abruptly.
Reserves provide the grid with immediate capacity to maintain system balance during sudden changes. Their availability is crucial for preventing outages and ensuring reliable electricity delivery.
The draft also retains a floor price of zero per megawatt‑hour, intended to preserve a fair and transparent market environment. Both floor and ceiling levels will be subject to review every five years or whenever market conditions warrant.
ERC Chairperson Francis Saturnino C. Juan indicated that the lower ceiling is designed to directly reduce reserve market prices. A more attractive price structure is expected to draw additional generators into ancillary services procurement agreements.
By narrowing the gap between spot‑market exposure and long‑term contracted rates, the proposal offers stronger incentives for generators to enter ASPAs. Wider participation in these agreements should reduce dependence on costly reserve market transactions.
Reduced reliance on high‑priced reserves is projected to stabilize and lower overall reserve costs for end‑users. The commission believes this approach will enhance market efficiency and price predictability.
The National Grid Corporation, the sole grid operator, recently linked a slight increase in July transmission rates to higher ancillary service charges. The ancillary charge rose 10.18% to P0.7955 per kilowatt‑hour for the June supply period, up from P0.7220 the previous month.
