Philippines suspends spot power sales as Iran war sends prices soaring

By Sudarshan Varadhan

SINGAPORE, March 26 (Reuters) - The Philippines suspended electricity sales on the Wholesale Electricity Spot Market until further notice on Thursday due to fuel supply risks and price volatility caused by the Iran war.

The suspension - a rare state intervention in one of the few Asian markets where electricity bills are linked to market prices - was ordered under a decree that declared a state of national energy emergency to deal with the fallout from the war, including disruptions to fuel procurement.

The country's Energy Regulatory Commission said it expects to finalise a modified pricing scheme by Wednesday.

Data from the Independent Electricity Market Operator of the Philippines showed average spot power prices in the Philippines jumped 58% this month after the war launched by the U.S. and Israel on February 28 rattled fuel supplies.

Prices in Mindanao and Visayas territories have nearly doubled, while those in more populous Luzon rose 42%.

The suspension follows through on plans flagged by Energy Secretary Sharon Garin in an interview with Reuters on March 13, in which she said the government would intervene in the market to stop a projected surge in power bills.

Power tariffs in the archipelago of more than 100 million are the highest in the region after Singapore.

A modified pricing scheme was being adopted as historical market prices no longer "reflect current conditions marked by geopolitical tensions and fuel supply constraints," the commission said.

During the suspension, the power system will operate under guidelines that aim to prioritise renewable energy and conserve critical fuel inventories, it said.

"Coal plants may be paid at a fixed rate, natural gas plants based on contracted prices," the commission said in a statement, adding that the market will remain suspended until the conditions are suitable for normal operations.