Electricity price hike to follow pump price increases, ERC says

Electricity prices in the country are expected to increase following the upward movement of global fuel prices due to the ongoing conflict in the Middle East, the Energy Regulatory Commission (ERC) said Friday.

Citing projections from the Independent Electricity Market Operator of the Philippines (IEMOP), the ERC said electricity prices in the Wholesale Electricity Spot Market (WESM) could climb should global supply disruptions persist.

The simulations took into consideration scenarios involving increases in international coal, oil, and liquefied natural gas (LNG) prices and supply constraints. This indicates that higher fuel costs could push WESM prices higher as generators pass this on in their market offers.

“This is part of our proactive approach. We conduct stress tests to understand possible risks early and ensure that consumer protection mechanisms are in place should global fuel volatility persist,” ERC Chairperson and Chief Executive Officer Atty. Francis Saturnino Juan said in a statement.

“Our priority is to protect consumers from undue price volatility while ensuring a stable and reliable power supply. Preparedness remains important given the Philippines’ exposusre to global energy markets,” he added.

This comes as global fuel prices have continued to increase, with oil industry sources expecting a big-time pump price hike in the coming week.

The ERC has since noted that the country has existing regulatory safeguards and market protection mechanisms which remain operational, including the Secondary Price Cap that is automatically triggered if sustained price hikes exceed regulatory thresholds.

The Commission also directed the IEMOP and ERC Market Operations Service to closely monitor market activities and report unusual or suspicious market behavior to prevent abuses of market power or taking advantage of the prevailing market conditions.

The Department of Energy (DOE) on Wednesday said pump prices could be hiked further due to global developments such as the closure of the Strait of Hormuz, a key global shipping corridor. The agency said it will appeal to firms to stagger the implementation of hikes starting next week.

For its part, Manila Electric Company (Meralco) earlier said it will review its fuel position, particularly in liquefied natural gas (LNG), and assess its potential impact on power prices due to the Middle East conflict.

Tensions in the Middle East heightened over the weekend, as US-Israeli airstrikes killed Iranian Supreme Leader Ayatollah Ali Khamenei, which American President Donald Trump celebrated. The death was later confirmed by Iranian state media.

Trump earlier on Monday (Sunday Washington time) that combat operations in Iran would continue until all objectives are achieved, as he confirmed that three US service members were killed and there would likely be more casualties. — BAP, GMA Integrated News