FIRSTGEN.COM.PH

FIRST GEN Corp. is calling for reforms in the regulatory framework, including a review of price caps in the Wholesale Electricity Spot Market (WESM), to allow power generators to recover returns and encourage further investments.

“There are regulatory policies and market mechanism structures that make critical power investments difficult to sustain,” First Gen President and Chief Operating Officer Francis Giles B. Puno said during the company’s annual stockholders’ meeting on Thursday.

Mr. Puno said there is a need to re-evaluate market price caps that compress margins and deter investments.

Under the Electric Power Industry Reform Act of 2001, the Energy Regulatory Commission (ERC) is responsible for promoting competition, encouraging market development, and discouraging abuse of market power within the restructured electric industry.

Mr. Puno said current market caps prevent merchant generators — who do not operate continuously — from earning sufficient returns.

“The way it’s working right now is that at the time when the power is needed the most, the market intervenes — so it’s like, what’s the incentive for you to operate? If that’s the case, or even worse, what’s the incentive for you to make more investments in merchant facility?” he said.

He noted that other countries have clearer policies to ensure sufficient capacity is built, including merchant capacity.

Mr. Puno also called for stronger government support through longer-term offtake agreements, commercially viable structures, and credit guarantees to attract major infrastructure investments.

First Gen’s current portfolio includes 3,668 megawatts of combined capacity from geothermal, wind, hydropower, solar energy, and natural gas plants.

For 2025, the company set a capital expenditure budget of $601 million, with a significant portion allocated to geothermal projects under its subsidiary Energy Development Corp., First Gen Chief Finance Officer Emmanuel Antonio P. Singson said. — Sheldeen Joy Talavera