Singapore offers more choices for all electricity users in 2018

The Government has gradually liberalised the electricity market over the years by lowering the contestability threshold in phases, but households have not been brought on board until now. — TODAY pic
The Government has gradually liberalised the electricity market over the years by lowering the contestability threshold in phases, but households have not been brought on board until now. — TODAY pic

SINGAPORE, Oct 27 — In three years, households and more commercial consumers can choose from whom they wish to buy electricity to power their homes and businesses, under a fully liberalised electricity market.

Consumers could choose whether to buy from electricity retailers under customised price plans, or from wholesale electricity markets where prices change at fixed intervals.

The Government plans to fully liberalise the electricity market in the second half of 2018, said Minister for Trade and Industry (Industry) S Iswaran yesterday, at the Singapore International Energy Week 2015 at the Sands Expo and Convention Centre.

This will allow another 1.3 million consumers, mainly households, to have flexibility and choice in their electricity consumption, he said.

The Government has gradually liberalised the electricity market over the years by lowering the contestability threshold in phases, but households have not been brought on board until now. The contestability threshold — how much electricity a consumer must use monthly to be eligible — was lowered from 10MWh to 8MWh in 2004, to 4MWh last year, and to 2MWh in July. This has allowed 33,000 commercial and industrial consumers — from large users such as petrochemical companies to smaller users such as coffee shops and kindergartens — to participate in the contestable market, instead of remaining on the regulated tariff with Singapore Power (SP), he said.

A spokesperson from SP told ­­TODAY that the organisation supports the move. The organisation has been “steadily working behind the scenes” to deploy technology and refine processes to support this initiative, such as with the installation of Advanced Metreing Infrastructure metres and the enhancement of current IT systems to provide reliable and accurate back-end support. “These steps will allow customers to better monitor and manage their usage and will help to facilitate the development of a competitive market,” he said.

Nanyang Technological University Assistant Professor of Economics Chang Youngho said with the full retail competition, consumers would benefit as they would be able to respond to the prices and reduce their consumption of electricity, which should lead to a reduction in expenditure.

But for this to work, the costs of preparing consumers here for the new model — such as the installation of new metres — must be low enough for there to be gains, he said, adding the Government has likely taken this into account before making the announcement.

There are currently 14 retail electricity licensees authorised by EMA to retail electricity to contestable customers. PacificLight general manager of Retail Geraldine Tan said the company sees full retail contestability as a “logical market development”, and that they look forward to delivering value-added services to all consumers when the retail market is fully opened up to competition in 2018.

A Keppel Electric spokesperson told TODAY: “Keppel Electric takes an interest in this development, as it potentially allows Keppel to grow its business and offer household consumers more choices.”

The EMA said it will release more details on plans for full retail competition soon.

Speaking to reporters after his speech, Iswaran said: “As you can imagine, given the scale of such an undertaking, it needs time, especially from a back-end perspective, to ensure that the key service providers have the infrastructure and capability to fulfil the requirements, and EMA is working with the stakeholders on this.” — TODAY

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