Experts highlight how forward contracts and risk management practices can smooth electricity prices and prevent sudden bill shocks

Sudden spikes in electricity prices continue to expose Filipino households and businesses to unexpected costs, a phenomenon commonly referred to as “bill shock.” Experts say that financial hedging—a risk management practice widely used in other liberalized power markets—could help smooth retail electricity prices while maintaining the integrity of the Wholesale Electricity Spot Market (WESM).

To explore this approach in the Philippine context, Green Tiger Markets (GTM) convened energy regulators, utilities, electric cooperatives, and consumer representatives on January 26 for a roundtable titled “Preventing Bill Shock.” The forum examined how financial hedging tools, such as contracts for difference, can reduce exposure to short-term price volatility without affecting the physical delivery of electricity.

“Financial hedging allows utilities to manage price risk proactively. By using tools such as contracts for difference, companies can reduce the impact of short-term market swings on consumers’ monthly bills without changing how electricity is physically delivered,” John Knorring, CEO and founder of GTM said.

GTM President Carlos Korten added, “When applied responsibly, hedging can smooth out electricity costs over time, giving both consumers and businesses more certainty. It’s not about replacing the market—it’s about complementing it to prevent bill shock.”

Experts noted that international markets regularly use financial hedging to stabilize retail electricity prices, protect vulnerable consumers, and support long-term investment planning. In the Philippine context, financial hedging could serve as a risk management tool for distribution utilities (DUs) and electric cooperatives (ECs), provided there is regulatory clarity and proper governance around cost pass-throughs.

Panel discussions at the roundtable emphasized how electricity price volatility affects household finances, business operating costs, and investment decisions. Forward-looking risk management practices, such as financial hedging, can mitigate these challenges and support a more resilient energy market.

_{^{ERC Chair Atty. Francis Saturnino Juan with Green Tiger Markets CEO and Founder John Knorring}}

“The conversation around hedging is about creating a stable and predictable electricity environment,” said Knorring. “It is a tool that benefits both market participants and the end consumers who ultimately bear the cost of volatility.”

The roundtable was anchored by the regulatory perspective, with Energy Regulatory Commission (ERC) Chairman Atty. Francis Saturnino Juan among the principal speakers. He talked about the role of consumer protection and regulatory oversight in addressing electricity price volatility. Former ERC Commissioner Atty. Ina Magpale-Asirit and former Securities and Exchange Commission (SEC) Commissioner Atty. Eph Amatong, were also present to discuss insights on regulatory evolution, market oversight, and consumer safeguards.

Key discussions also featured GTM Head of Asia Pacific Oliver Pearson, alongside legal and regulatory experts from DivinaLaw, Mossveldt Law, and the Private Electric Power Operators Association (PEPOA), who examined governance, compliance, and market design considerations for the use of financial hedging in the power sector.

Operational perspectives were provided by senior executives from the distribution utility and electric cooperative sector, including representatives from Dagupan Electric, MORE Power, AboitizPower’s Distribution Group, PHILRECA, and La Union Electric Company, highlighting the implications of WESM price volatility on retail rates and consumer bills

The forum also brought together energy media and technology solution providers, reinforcing the importance of transparency, data, and clear public communication in mitigating bill shock.

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About Green Tiger Markets

Green Tiger Markets (GTM) is the Philippines’ first exchange-based forward electricity marketplace, providing tools for energy generators and consumers to hedge against WESM price volatility using financially settled contracts for difference (CFDs) and custom futures. By offering market-based risk management solutions, GTM helps participants reduce exposure to price swings, support investment, and enhance transparency in the electricity market.

Contact:

Green Tiger Markets

Email: [email protected] 
Website: www.greentigermarkets.com 
LinkedIn: https://www.linkedin.com/company/green-tiger-markets 

This article was originally prepared for January 26, 2026 and published later due to temporary site downtime.