THE integration of Mindanao into the Wholesale Electricity Spot Market (WESM) has improved power reliability, strengthened energy security, and increased investor confidence in the region, according to the Department of Energy–Mindanao (DOE-Mindanao).
In an interview with SunStar Davao, DOE-Mindanao Senior Science Research Specialist Erick George D. Uy said WESM addressed a long-standing problem: the lack of access to additional electricity during outages or shortfalls.
“Mindanao's transition into the WESM was met with several key challenges. A major concern among distribution utilities was the perceived volatility of market-based pricing under WESM, which introduced uncertainties compared to the stability of traditional bilateral contracts,” he said. “There were also apprehensions regarding operational readiness, including questions on capacity allocation, supply security, and system reliability in a more dynamic and competitive environment” Uy added.
He said that before WESM, distribution utilities like Davao Light and Power Company (DLPC) depended solely on their existing power supply contracts. Even when there was a regional power surplus, these utilities had no way to tap into additional electricity during outages or shortages because they lacked agreements with other generators. The introduction of WESM addressed this limitation by creating an open trading platform where utilities can now source electricity from a wider range of suppliers.
WESM serves as a centralized electricity trading platform where prices are driven by actual supply and demand. Before its rollout in Mindanao, electricity purchases were made mainly through long-term bilateral contracts—an arrangement that limited flexibility and delayed response to sudden surges in demand or generation issues.
Uy acknowledged that the transition faced resistance from stakeholders, especially distribution utilities and electric cooperatives, who feared price volatility and questioned their operational readiness.
To address these concerns, the DOE, in collaboration with the Energy Regulatory Commission (ERC) and the Independent Electricity Market Operator of the Philippines (IEMOP), launched technical training, market simulations, and orientations to prepare stakeholders for the shift.
The integration was formalized through a DOE advisory issued on May 11, 2023, officially recognizing the operation of a unified national grid and linking Luzon, Visayas, and Mindanao under a single market system. The integration of Mindanao into the unified national grid brought greater alignment in policy direction and streamlined market operations, making it easier for stakeholders in the region to participate in electricity trading.
Uy noted that WESM’s transparency and structured rules have helped attract more investment into the power sector. The platform’s ability to accommodate excess generation has been especially appealing to renewable energy developers, who now have greater confidence that the market can absorb surplus capacity beyond their bilateral contracts.
Established under the Electric Power Industry Reform Act (Epira) of 2001, WESM was designed to foster competition and efficiency in the power industry. It launched commercial operations in Luzon in 2006, expanded to the Visayas in 2010, and—after years of preparation—finally went fully operational in Mindanao in January 2024.
“The ability to participate in a national energy market has attracted new investments in power generation, particularly in renewable energy and flexible generation assets, as developers now have a viable and competitive venue to sell excess capacity beyond their contracted customers,” Uy said.
He said that WESM’s entry into Mindanao represents a major step toward building a more flexible, reliable, and investment-ready energy sector for the region. DEF