ERC halts Reserve Market trading, citing costly backup power in the Visayas

MANILA, Oct. 12, 2026 — The Energy Regulatory Commission (ERC) has suspended commercial dispatch and settlement in the Reserve Market, the spot facility where the grid operator buys backup power, after finding that prices there stayed far above those of contracted reserves.

In a statement on Monday evening, Oct. 12, the regulator said the pause would stay in place until further orders. During the suspension, the National Grid Corp. of the Philippines (NGCP) will draw reserves only from existing ancillary service procurement agreements (ASPAs) at approved rates and from designated must-run plants paid on a regulated cost-recovery basis.

The ERC’s review of 2025 data showed the gap was widest in the Visayas. Spot reserve purchases there cost about P19.6 billion and added P1.29 per kilowatt-hour (kWh) to rates, against roughly P0.02 per kWh for contracted reserves. In Luzon, the Reserve Market cost P24.53 billion, about double the P12.75 billion spent under ASPAs. Mindanao was the exception, with P3.71 billion in market costs versus P3.90 billion in contracts.

The regulator said the price difference gave generators little reason to sign lower-priced contracts, and that an earlier cut in the offer cap, from P32,000 to P25,000 per megawatt-hour, had not fixed the problem, the Daily Tribune reported. ERC Chairperson Francis Saturnino Juan described the move as a temporary correction made with the Department of Energy, not an abandonment of the market.

NGCP must assess its uncontracted reserve needs within 30 days and pursue more contracts. NGCP, the Philippine Electricity Market Corp. and the Independent Electricity Market Operator of the Philippines (IEMOP) have six months to propose a redesigned market. IEMOP said at an Oct. 13 briefing that the suspension would start Oct. 14 and covers spot reserves only.

In a later interview with The Philippine Star, published Nov. 3, Juan said he wants ASPAs to run at least 10 years, up from five, to reduce future reliance on spot reserves.

What it means for consumers

Reserve costs are passed through as ancillary service charges on bills. IEMOP trading operations vice president Isidro Cacho Jr. said removing spot reserve purchases should bring transmission-related charges down. No estimate of the per-kWh savings has been released.