Philippines ERC suspends Reserve Market to curb high power costs

The Energy Regulatory Commission (ERC) has suspended the commercial dispatch and settlement of the Reserve Market within the Wholesale Electricity Spot Market (WESM). The decision aims to mitigate elevated ancillary service prices that have significantly impacted electricity rates, particularly in the Visayas region.

An ERC review revealed that in the Visayas, Reserve Market costs reached PHP 19.57 billion in 2025, compared to PHP 1.69 billion for contracted Ancillary Service Procurement Agreements (ASPAs). The impact on electricity rates in the Visayas from the Reserve Market was PHP 1.29 per kWh, whereas ASPA costs were only PHP 0.02 per kWh. In Luzon, Reserve Market costs totaled PHP 24.53 billion, nearly double the PHP 12.75 billion spent on contracted services.

During the suspension, the National Grid Corporation of the Philippines (NGCP) is required to source reserve needs from existing ASPA capacities at approved rates. The ERC has ordered the NGCP to propose a redesigned Reserve Market within six months to address structural issues and rules governing procurement and cost recovery.