The Energy Regulatory Commission has monitored a downtrend in generation rates in the first quarter, prompted by low Wholesale Electricity Spot Market (WESM) prices in February and January.
The ERC said power costs dropped to their lowest levels since January 2023, supported by a stable system margin in the spot market due to higher plant availability.
“The downward trend in generation rates in Q1 of this year reflects the benefits of a new or additional power supply and steady operations of the spot market. Despite external cost pressures, we saw a significant drop in average generation rates, and this demonstrates that effective market monitoring works,” ERC chairperson and chief executive Monalisa Dimalanta said.
The regulator said that despite a price spike in March, driven by increased demand due to higher temperatures, the average quarterly generation cost remained steady given the low rates earlier in the quarter.
Based on ERC data of similar period last year, first quarter generation rates declined in all island groups, with the year-on-year quarterly
It said Luzon and Visayas recorded substantial drops of 11.5 percent and 8.1 percent, respectively, while Mindanao posted a modest 0.5 percent YoY decrease.
Most areas in Luzon, which have high exposure to lower WESM prices, experienced sharp declines in generation costs.
However, Metro Manila—the on-grid Luzon area with the lowest WESM exposure—saw a 3 percent YoY quarterly increase.
The ERC said the decrease in WESM prices led to lower average generation rates in the first quarter, despite higher fuel prices and a weaker peso.
Higher net supply levels brought system-wide WESM prices down to a quarterly average of P3.68 per kilowatthour in Q1 2025, compared to P4.56 per kWh in Q1 2024, which contributed to a drop in the national average blended generation rate to P5.80 per kWh from P6.28 per kWh over the same period.
The ERC said the stable WESM supply effectively offset the impact of elevated Indonesian coal prices (still the dominant power source), higher liquefied natural gas (LNG) landed costs, and the weaker peso over the period.
