Philippines suspends spot sales of electricity due to Middle East conflict

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SINGAPORE – The Philippines suspended electricity sales on the Wholesale Electricity Spot Market until further notice on March 26 due to fuel supply risks and price volatility caused by the Iran war.

The suspension - a rare state intervention in one of the few Asian markets where electricity bills are linked to market prices - was ordered under a decree that declared a state of national energy emergency to deal with the fallout from the war, including disruptions to fuel procurement.

The country’s Energy Regulatory Commission said it expects to finalise a modified pricing scheme by April 1.

Data from the Independent Electricity Market Operator of the Philippines showed average spot power prices in the Philippines jumped 58 per cent in March after the war launched by the US and Israel on Feb 28 rattled fuel supplies.

Prices in Mindanao and Visayas territories have nearly doubled, while those in more populous Luzon rose 42 per cent.

The suspension follows through on plans flagged by Philippine Energy Secretary Sharon Garin in an interview with Reuters in March, in which she said the government would intervene in the market to stop a projected surge in power bills.

A modified pricing scheme was being adopted as historical market prices no longer “reflect current conditions marked by geopolitical tensions and fuel supply constraints”, the commission said.

During the suspension, the country’s power system will operate under guidelines that aim to prioritise renewable energy and conserve critical fuel inventories, it said.

“Coal plants may be paid at a fixed rate, natural gas plants based on contracted prices,” a statement from the commission said adding that the market will remain suspended until the conditions are suitable for normal operations. REUTERS