Philippine regulators’ move to suspend electricity spot market trading is seen as a tailwind for the power sector.
As the conflict in the Middle East snarled energy supply, the Philippine government declared an emergency energy crisis.
This prompted the Energy Regulatory Commission (ERC) to suspend trading on the Wholesale Electricity Spot Market (WESM). In its place, an administered price was put in a bid to protect consumers and support the power generators amid higher generations costs.
Coal-fired power plant price is set at PHP 6/kwh, higher than the average spot market last year. This may benefit coal-fueled plant owners and incentivize baseload sustainability.
For other energy sources, prices for a specific trading day are based on the prices of the same trading day from the last four weeks. This is coupled with manual adjustments in case of any market condition changes—including setting any negative prices to zero.
Priority dispatching is implemented to ensure cheaper and more available resources are put in the power grid first. Renewable energy (RE), notably solar, wind, and river-based hydro are considered a “must dispatch.”
Price-sensitive fuel-plants, meanwhile, will be allowed compensation if filled within the prescribed period.
ACEN Corp. and Semirara Mining and Power Corp. have large exposure to the spot market. Thus, they may see an upside for the duration of the implemented pricing strategy, given how the administered pricing replaces historically low WESM prices. Additionally, ACEN's 100% RE portfolio would benefit from priority dispatching.
In terms of Semirara’s coal mining business, the government’s push for coal dispatch and stability may raise their chances of re-winning their operating contract and ease concerns over a significant overhang.
Both Aboitiz Power Corp. and Manila Electric Co. may see little impact from this development, given they have minimal spot market exposures of less than 10%. Additionally, their shares in natural gas plants have been contracted for 10 years since 2025, which may protect them against any volatility in Liquefied Natural Gas (LNG) prices.
Given the confluence of these positive catalysts, the sector's defensive story appears to be holding strong and may continue to be a safe haven for investors.
For those looking to gain investment exposure into the power sector, Metrobank’s High Dividend Yield Unit Paying Fund aligns with the solid dividend-paying capacity provided by power and utilities sectors.
WILLIE KRISTOFFERSON YU is an Equity Research Analyst at Metrobank’s Trust Banking Group. His coverage includes utilities, telcos, mining, and gaming, as well as select offshore markets. He holds a Bachelor’s degree in Management Engineering from Ateneo de Manila University. He is currently pursuing industry certifications to better immerse himself in Financial Markets. Outside of work, he enjoys playing the piano and golf.
GENEVIEVE PECAÑA is the Head of Investment Services Division at Metrobank’s Trust Banking Group, overseeing fixed income and equity investment analysis, offshore fund selection, portfolio and performance analytics, and trade execution across all asset classes. Ginny has garnered multiple awards for fund management with her decades of banking experience. She holds a Bachelor’s degree in Business Management from the Ateneo de Manila University as well as various finance certifications in Trust and Treasury operations, and as UITF and SEC Salesman. She loves travelling the world and watching movies.
