WESM Spot Prices Spike During El Nino — What It Means for Consumers

The Wholesale Electricity Spot Market recorded average prices of P9.85 per kWh during the week of February 10–16, 2025 — more than double the long-run average and the highest weekly average since the post-pandemic price spike of 2022. The immediate cause is El Nino: reduced rainfall has cut hydro output across Luzon, forcing the dispatch of more expensive coal and oil peakers to meet demand.

The spot market price represents the marginal cost of electricity in real time — the price at which the most expensive unit needed to balance supply and demand is offered. When hydro plants that normally bid low are unavailable, the dispatch stack shifts toward higher-cost thermal units, and the market-clearing price rises accordingly.

The transmission from spot price to consumer bill is indirect but real. Retailers and distribution utilities that buy on the spot market pass costs through; those with long-term contracts at fixed prices are insulated in the short run but face higher renewal costs when contracts expire.

The WESM price spike is a temporary phenomenon tied to weather patterns that will eventually normalize. But it is also a structural signal: a grid with more storage and demand response capacity would be less susceptible to hydro shortfalls, because stored energy could substitute for the missing hydro output without forcing expensive peaker dispatch.