The full impact of the escalating Middle East conflict on electricity prices is expected to hit consumers in April and May, after global fuel markets reeled from renewed violence in one of the world’s most critical energy corridors, the Energy Regulatory Commission (ERC) warned this week.
While households will not see changes in their March electricity bills, regulators say rising prices for imported coal, oil and liquefied natural gas (LNG) — fuels on which the Philippines heavily depends — are already placing upward pressure on the Wholesale Electricity Spot Market (WESM). The ripple effects, officials say, are unavoidable if geopolitical tensions persist.
Global Conflict, Local Consequences
The latest surge in fuel prices followed attacks over the weekend prior to March 4, when United States and Israeli forces struck targets in Iran. Tehran responded with missile and drone attacks across Israel and parts of the Gulf, disrupting tanker routes through the Strait of Hormuz — a narrow passage that functions as a vital artery for global oil shipments.
The Philippines, an archipelago that imports much of its fuel, is particularly exposed. Coal and LNG power a significant share of the country’s electricity generation. Any constraint along major shipping routes quickly feeds into domestic energy costs.
On March 6, the ERC met with the Independent Electricity Market Operator of the Philippines (IEMOP) to conduct market simulations assessing the potential impact of prolonged fuel price volatility.
“This is part of our proactive approach. We conduct stress tests to understand possible risks early and ensure that consumer protection mechanisms are in place should global fuel volatility persist,” ERC Chairperson Atty. Francis Saturnino C. Juan said.
The simulations indicate that higher international fuel prices will likely push WESM rates upward, with the earliest significant billing impact expected in April and more fully reflected by May.
No March Increase, But April Looms
Manila Electric Company (Meralco), the country’s largest distribution utility serving 8.1 million customers, echoed the regulator’s warning. Company officials said there would be no effect on March billing, but cautioned that April could tell a different story.
“The earliest we may see an effect is for April. But again, this would depend on how long this situation will persist,” said Meralco Vice President Lawrence S. Fernandez.
Meralco Chairman Manuel V. Pangilinan said the utility is reviewing its fuel mix to cushion consumers from volatility.
“We want to ensure adequate supply of power and manage price volatility as responsibly as possible. [I] have made it clear to the team that we must help protect consumers as cost of goods rises globally,” Pangilinan said.
The company’s current supply mix illustrates the vulnerability: about 60% comes from natural gas, 20–25% from coal, roughly 10% from renewables, with the remainder sourced from WESM. A spike in imported fuel prices can therefore ripple across most of its portfolio.
In February alone, Meralco rates rose by P0.2226 per kilowatt-hour, bringing the average rate to P13.1734/kWh, up from P12.9508/kWh in January due to higher transmission charges. Further increases linked to global fuel markets would compound that burden.
Inflation Risks Resurface
The energy shock extends beyond power bills. Analysts warn that higher oil prices could reignite inflationary pressures not seen since the early months of the Russia–Ukraine war in 2022.
Nomura Global Markets Research estimates that a 10% rise in global oil prices could add around 0.5 percentage points to Philippine inflation and shave about 0.07 percentage points off GDP growth.
Security Bank Chief Economist Angelo Taningco cautioned that a sustained increase of at least $10 per barrel could push inflation close to 6%.
“If that persists, then we will likely revise upward our inflation forecast… clearly it’s inflationary — the oil price shock as well as the conflict in the Middle East… electricity prices will be shooting up as well,” Taningco said.
The Bangko Sentral ng Pilipinas (BSP) has so far maintained its inflation forecast of 3.6% for 2026, easing to 3.2% in 2027, describing the disruption as temporary. But prolonged instability in oil-producing regions could challenge those projections.
Households Bear the Brunt
For ordinary consumers, higher WESM prices translate into rising monthly bills — affecting lighting, refrigeration, electric fans, and small appliances essential to daily life.
Across Metro Manila and nearby provinces served by Meralco, families may feel the squeeze first. But the impact will extend nationwide, as fuel costs also influence transport fares, food prices, and the operating expenses of small businesses from sari-sari stores to neighborhood eateries.
The pressure is cumulative. Electricity feeds into nearly every product and service, much like the current in a circuit: once voltage spikes, the effects run through the entire system.
Regulators Monitor Supply Stability
Beyond price volatility, the ERC’s simulations also assessed risks from possible supply constraints and forced outages at generating plants — scenarios that could intensify price swings in the spot market.
While authorities stress that preparations are in place, they acknowledge the country’s structural vulnerability due to its dependence on imported fuels.
“Preparedness remains important given the Philippines’ exposure,” the ERC noted in its assessment.
For now, March bills will remain unaffected. But as April approaches, the trajectory of conflict thousands of miles away — along the narrow waters of Hormuz — may soon be reflected in the figures on Filipino households’ electricity statements.
