More businesses to benefit as electricity market further liberalised

SINGAPORE — More businesses will soon be able to enjoy potential cost savings as the Government plans to lower the threshold for them to buy electricity directly from licensed retailers at more competitive prices.

On July 1 next year, the Energy Market Authority (EMA) will lower the contestability threshold for direct purchase to 2 megawatt-hours (MWh) per month from the current 4MWh. Consumers who are contestable are free to buy electricity from any of the licensed electricity retailers.

The move will benefit about 10,000 more commercial and industrial (C&I) consumers, Second Minister for Trade and Industry S Iswaran said yesterday at the Singapore International Energy Week (SIEW).

This marks the third lowering of the threshold from the initial 10MWh level since April and the framework will ultimately be extended to residential users, Mr Iswaran said.

“Our goal is to progressively liberalise the electricity market so that all remaining 1.3 million consumers, from households to businesses, will enjoy the same flexibility and choice,” Mr Iswaran said.

“We want to make sure we take a measured approach (for full retail contestability) … The EMA is studying various options and we will have greater clarity over the next few years on how to accelerate that process,” he added.

Ms Geraldine Tan, general manager for retail at PacificLight Energy — one of the seven licensed electricity retailers — confirmed that talks are ongoing between the EMA and market operators on full retail contestability, but said its implementation will not be a cakewalk.

“It will require investments on systems for us to serve 1.3 million account holders instead of the thousands currently. More manpower is also needed to assess the more complex dynamics with the general public for us to better serve them,” she said.

Currently, there are about 23,000 C&I consumers who are eligible to buy electricity directly from licensed providers or the wholesale market instead of from SP Services. This gives users the flexibility to negotiate more attractive packages and prices, with savings of up to 12 per cent, said an EMA spokesperson.

The announcement was part of a slew of initiatives unveiled by Mr Iswaran yesterday to highlight the Government’s long-term plan to enhance Singapore’s energy sector.

To reduce Singapore’s reliance on piped natural gas from neighbouring countries, the Government launched a S$1.7 billion liquefied natural gas (LNG) terminal on Jurong Island in May last year.

This terminal’s throughput capacity will be nearly doubled to 11 million tonnes per year by 2017, Mr Iswaran said, adding that the Government is also studying potential sites in eastern Singapore for a second terminal.

The Government is also simplifying close to 70 rules and regulations to streamline information and reporting requirements and enable the application processes for gas and electricity licences to be made less onerous.

It has also set aside S$25 million for a new programme to develop technologies for power system resilience.

“The EMA has also established a S$20 million Energy Training Fund to support the training needs of Singaporean workers from the power sector,” Mr Iswaran said.

“Singapore Power has taken the lead to … coordinate the training needs … by establishing the Singapore Institute of Power and Gas (SIPG).” The SIPG will launch its first courses next year, with a focus on power plant operations and asset management.