The Philippines can tame power-price surges by embracing forward hedging.

By John Knorring, CEO Green Tiger Markets

The monthly jolt

Filipino households know the feeling: a bill arrives fattened by a heatwave or a hiccup in global energy markets. “Bill shock” is more than a nuisance. It strains family budgets, squeezes firms’ margins and erodes trust in the power sector.

Why the shocks keep coming

The cause is structural. A big share of electricity is bought through the Wholesale Electricity Spot Market (WESM). Spot markets are efficient at dispatching power but, left alone, they transmit no information about future prices. When demand jumps or supply falters, prices leap. In 2023–24, weather-driven load, higher global fuel costs and domestic bottlenecks amplified the swings; prices have been seen as low as PHP 2.60 per kWh and above PHP 8.70. Utilities pass these inflated costs on to Filipino families, who have no tools to manage the higher bills from their providers. The government’s  response—most notably an “Anti-Bill Shock” lending programme that lets distributors spread costs—smooths cashflows but not underlying risk. It is a plaster, not a cure.

The missing instrument

The real gap has been the lack of credible forward price signals and simple tools to hedge them. A forward market does not make electricity cheaper by magic; it makes it forecastable. By allowing buyers and sellers to agree today the price of power delivered months ahead, it converts unknown future costs and revenues into known present ones. The US, Europe,  Australia, New Zealand, and more recently, Japan, learned that spot markets clear the physics of power, while forward markets manage the finances.

An emerging fix

That logic is now developing in the Philippines. Green Tiger Markets, a Singapore-based platform, provides a marketplace for energy industry participants in the Philippines to enter into financially settled contracts that reference a future delivery period. These instruments do not move electrons; they move commercial risk. A utility that locks in a forward price is insulated from a later spike on WESM. A generator gains revenue visibility to keep plants maintained and financiers calm. As trading builds, published forward prices become a reference for planning and procurement.

Why it matters

For consumers and businesses, forward hedging turns lumpy, anxiety-inducing bills into budgetable expenses. For developers—especially in renewables—it anchors cashflows, lowering the cost of capital and encouraging new capacity. For the system as a whole, transparent forward prices sharpen competition: they reveal the market’s collective view of future scarcity, disciplining both sellers and buyers. And for policymakers, widespread hedging reduces the temptation to deploy ad-hoc bail-outs when the weather misbehaves.

The policy task

Government can speed maturation without picking winners. Require utilities to adopt prudent hedging policies; invite periodic auctions for standard forward products; ensure accounting and prudential rules do not penalise hedge use; and maintain clear, predictable oversight. Most of all, resist the urge to micromanage prices on the spot market; let hedging, not emergency lending, cushion the blows.

A steadier future

So long as the Philippines leans heavily on spot purchases and short-term fixes, bill shock will haunt the letterbox. The spread of straightforward forward hedging—now technically feasible and locally available—offers a more durable answer: stability through certainty. If generators, distributors and policymakers back it, the country can lay this ghost to rest and give households what they prize most: electricity that is not only affordable, but reliably so.

About the Author

John Knorring is the founder and CEO of Green Tiger Markets, the first and only provider of a forward marketplace for the Philippines energy industry. He has over 25 years experience in forward hedging markets. He is a believer in the power of markets and a proponent of transparency and price discovery. John, a Chicago native, is a resident of Austin, Texas.