Philippines freezes spot electricity market, Iran war disrupts energy supply

JAKARTA - The Philippines has temporarily stopped selling electricity in the spot market due to the risk of fuel supply and price volatility triggered by the Iran war. Malay Mail quoted Thursday, March 26 reported, the spot market is a short-term electricity market whose price moves according to daily supply and demand.

This decision was taken after the government declared a national energy emergency through a decree. It was taken to face the impact of the war, including disruptions in fuel procurement.

The Philippine Energy Regulatory Commission said the modified pricing scheme is targeted to be completed by April 1. This policy follows a market intervention plan previously submitted by Energy Minister Sharon Garin to Reuters this month. At that time, Garin said the government would intervene to hold off on the projected 16 percent increase in electricity bills.

According to the commission, the new pricing scheme was implemented because historical market prices no longer reflect current conditions characterized by geopolitical tensions and fuel supply constraints. Therefore, the spot electricity market was temporarily suspended.

During the suspension period, the Philippine electricity system will run with guidelines that prioritize renewable energy and savings of fuel reserves that are considered critical. In the interim scheme, coal-fired power plants can be paid at a fixed rate, while natural gas-fired plants refer to contract prices.

The Commission said this suspension would remain in place until conditions were deemed safe to resume normal market operations.