EMA has carefully considered all the comments received and Frontier Economics' (FE) responses thereto.  EMA has decided on balance to adopt FE’s recommendations to transit towards the Balanced Market regime by implementing the following measures:

a. Impose a capacity market share cap of 25% on each generation licensee except for the three large gencos (viz. Seraya, Senoko andTuas). For the three large gencos, EMA will impose the higher of either the 25% capacity market share cap or their respective MW licensed capacity cap, until the current expiry date of their respective generation licence. Beyond the current expiry dates, their respective MW licensed capacity cap will be terminated and the 25% generation capacity market share cap will apply. For the avoidance of doubt, each generation licensee is still subject to the condition in its generation licence that it shall not acquire, own, operate or have control over any generating unit, other than those set out in Schedule A of the licence, without the prior written approval of EMA;

b. Prudently hedge unvested MSSL load which could be via a combination of futures products, tenders and bilateral trades; and

c. Gradually phase out the VC regime, specifically by maintaining the VCL at 25% (of total demand) from 1 Jan 2017 to 30 Jun 2018, and reducing the VCL to 22.5% for 2H 2018 and to 20% for 1H 2019. Thereafter, only LNG vesting quantities will remain until the expiry of LNG vesting on 30 Jun 2023. During the transition period, retain the current VC allocation method and peak PWF which will effectively be phased out as part of the wider reduction of BVQ to zero by the start of 2H 2019.

31 Aug 2016:

EMA has carefullyconsidered FE’s assessment and recommendation aswell as the market participants’ comments. On balance, EMA intends to adopt theBalanced Market regime by implementing the measures as set out in the draft determination paper. The responses of Frontier Economics ("FE") and EMA to the comments received on the review of the vesting contract regime are set out in Appendix 1 of the draft determination paper. FE’s revised report, which takes into account the comments received, is attached at Appendix 3.

EMA would like to invite comments on the draft determination and FE’s revised report. Feedback should reach EMA not later than 5pm on 20 Sep 2016 in the format as shown in Appendix 4. You are requested to include a soft-copy of your comments in both PDF and Microsoft Word format in your submission.

25 May 2016:

In the draft report by Frontier Economics ("FE"), they projected the long run marginal cost (“LRMC”) of a new entrant combined cycle gas turbine plant (for setting the vesting contract price) for 2017 and 2018 at $167/MWh and $168/MWh respectively. This projection is based on the fuel cost component of the vesting price indicated in EMA’s FinalDetermination Paper on Review of Vesting Contract Price Parameters for the Period 1 Jan 2015 to 31 Dec 2016, escalated by the LNG price index published in theWorld Bank’s Commodities Price Forecast released on 20 Jan 2016. 

FE has subsequently informed EMA that it has updated its projection based on the average of the fuel cost component in the quarterly vesting prices for 2015, escalated by the same forecast LNG price index provided by the World Bank. Accordingly, the FE’s updated LRMC projection is $129/MWh and $130/MWh for 2017 and 2018 respectively. FE has also clarified that this update has no bearing on its analysis and recommendations set out in the draft report.

6 Jun 2016:

The consultation has closed for comments.