By I. Inojales | 09:16 AM July 25, 2025
Electricity prices in the Philippines have seen a significant decline in the first half of 2025, driven by reforms, improved efficiency across the power sector, and increasing renewable energy adoption, according to the Independent Electricity Market Operator of the Philippines (IEMOP).
The average price in the Wholesale Electricity Spot Market (WESM) dropped from PhP5.58 per kilowatt-hour (kWh) in 2024 to PhP4.14/kWh in the first half of 2025—a 26% decrease—marking the most affordable average market price since 2020.
“To understand why prices are lower in the WESM, we need to appreciate the contribution of each segment in the electric power industry value chain,” said lawyer Richard J. Nethercott, IEMOP president and chief executive officer, in a press statement.
“It is a product of the collaborative efforts of all sectors—public and private—toward improving industry efficiency,” he added.
Government-Led Reforms Driving Change
Key initiatives by the Department of Energy (DOE) have contributed to the lower market prices. Among them are:
Green Energy Auction Program (GEAP) – Aimed at procuring renewable energy (solar, wind, hydro, geothermal, biomass) at competitive rates. Projections show that successful auction rounds could reduce Luzon electricity prices to ₱3.36/kWh by 2029.
Competitive Power Procurement – Distribution utilities are mandated to source power through competitive bidding, ensuring least-cost supply for consumers.
Energy Efficiency Promotion – The DOE urged consumers, especially during peak hours, to adopt energy-saving practices, easing grid load and preventing price surges.
Transmission Expansion – Projects such as the Mindanao–Visayas Interconnection and Cebu–Bohol 230 kV line have eased congestion, enabling lower-cost power to flow across regions.
Foreign Investment in Renewable Energy – The 2022 DOE circular liberalized foreign ownership in renewable energy projects, spurring investments.
Market-Based Programs – The DOE and IEMOP implemented WESM Mindanao, the Reserve Market, the Green Energy Option Program (GEOP), and the Renewable Energy Market (REM), all contributing to increased supply and market efficiency.
Regulatory and Market Innovations
The Energy Regulatory Commission (ERC) has also supported market reforms. Its Omnibus Rules for Customer Choice Programs (ERC Resolution No. 13, Series of 2024) streamlined rules for customer participation in the Retail Competition and Open Access (RCOA). A key innovation is the Retail Aggregation Program (RAP), which allows smaller consumers to pool demand and access better rates through competitive retail suppliers.
Retail market share reached 22.26% as of June 2025, up from 21.27% in 2024, reflecting the growing customer shift to retail electricity suppliers offering competitive rates.
Supply Growth and Grid Reliability
On the supply side, the power generation mix improved notably:
Renewable energy capacity grew by 1,000 MW, displacing higher-cost generation.
Natural gas plants increased their capacity output, averaging 3,674 MW, with higher reliability.
Overall system-wide supply margins grew to 6,916 MW in 2025, from 5,626 MW in 2024.
Transmission upgrades have likewise improved generator performance and reduced outages. Major projects like the Cebu–Negros–Panay backbone and Hermosa–San Jose lines enabled better market access to low-cost energy sources.
A Collaborative Success
Distribution utilities (DUs) have taken advantage of lower WESM prices, adjusting their contracting strategies to pass on savings to consumers. Meanwhile, retail programs like GEOP and RAP allowed businesses and eligible consumers to negotiate better rates.
“These developments show that lowering electricity prices is an industry concern that demands industry-wide collaboration,” Nethercott said. “The results of the past six months prove that with collective effort, lower market prices are achievable.”
IEMOP is a non-stock, non-profit corporation operating the WESM under a professional, independent board. It upholds transparency, fairness, and competitiveness in the trading of electricity in compliance with the Electric Power Industry Reform Act (EPIRA), WESM rules, and DOE regulations. With reports from Helen Castaño
