More Choices with Open Electricity Market

01 Oct 2018

We thank Mr Max Leong, Mr Goh Boon Kai and Mr Ong Soon Yam for their questions on the Open Electricity Market.

The Open Electricity Market will provide consumers with more choices when buying electricity. We recognise that not everyone may wish to switch to a retailer. Hence it is not compulsory to switch and there is no deadline.

Mr Goh and Mr Leong asked how is it that retailers are able to offer lower prices than the regulated tariff. The regulated tariff, charged by SP Group and approved by EMA, is based on a fixed formula reflecting the long-term costs to produce and deliver electricity in Singapore. SP Group has to supply electricity to all consumers while bearing the risks of an uncertain customer base as it does not impose any contract lock-in periods. Retailers, however, can set their prices based on their business strategies to adapt to shorter-term factors such as the prevailing market conditions and level of competition. They can also impose terms like contract lock-in periods with early termination charges for greater certainty over their customer base. While their price plans are fixed for the contract duration, retailers may adjust their prices over time.

We wish to assure consumers that EMA has put in place measures to protect their interests. Any retailer who wishes to enter the Open Electricity Market is subject to stringent review by EMA.

Should a retailer cease operations, electricity supply to its customers will not be disrupted. They will be automatically transferred to SP Group and can subsequently decide whether they wish to switch to another retailer.

EMA has simplified consumer choices by limiting the types of standard price plans. Those who prefer price stability can consider a
Fixed Price plan to pay a fixed rate throughout their contract duration. Another is the Discount Off the Regulated Tariff plan, which will be ideal for those who want to pay a rate guaranteed to be lower than the regulated tariff. As the Open Electricity Market is a new initiative, EMA will also provide resources to help consumers make informed decisions.

Consumers can visit for more information and use the price comparison tool to compare the standard price plans offered by retailers.

Mr Soh Sai Bor
Assistant Chief Executive (Economic Regulation)
Energy Market Authority

How are new retailers able to offer better prices than SP Group? - Max Leong
25 Sept 2018

I am sure I am not the only one wondering about the comment made by Energy Market Authority chief executive Ngiam Shih Chun (All households, firms to get choice of power retailer; Sept 22).
He said: "Those who switched paid an electricity rate which was on average about 20 per cent lower than the regulated tariff."

How is it that the 12 retailers are able to offer rates that are on the whole cheaper than the incumbent SP Group? As the dominant supplier in Singapore for decades with at least 1.4 million customers, why was SP Group not able to offer rates lower than the new retailers, who have much fewer customers?

Also, I do not understand the need to create artificial competition for the sake of competition. Simply give every customer the best rate and lower the cost of living for businesses and consumers in Singapore. Why create unnecessary middlemen, which will add to the cost of supply?

I still remember the days when competition was created for the print and broadcast media only for them to revert to the earlier situation after some years. For lower costs, we just need to keep things simple.

Maintaining cost savings tough in the long term - Goh Boon Kai
25 Sept 2018

I am not convinced that the open electricity market is an effective cost-saving programme for the benefit of the citizens (All households, firms to get choice of power retailer; Sept 22).

Singapore is dependent on imported natural gas, coal and related petroleum products for the generation of electricity. The prices of these commodities are subject to fluctuations due to global demands.

We cannot live without electricity. The Government should be involved to keep the cost of it reasonable and affordable.
How do we expect the power retailers, all purchasing electricity at the same base price, to provide the service support currently offered by SP Group, and still be able to generate cost savings of about 20 per cent, on top of making a profit?

At present, SP Group checks the electric and water meters once every two months and bills us.

With the introduction of the retailers, the electricity consumption data collected will need to be transferred to them to organise the billings.

Is this not additional work?

I believe SP Group will still be billing us for water services and refuse removal.

With no distinct productivity and efficiency improvements, I can only deduce that the cost savings are just introductory offers by the retailers. They are innovative offers, but they serve no purpose if there are no eventual long-term cost-saving benefits.

Contract lock-in periods are six, 12 and 24 months.

For consumers with time on their hands, it may be worth the trouble to review the charges and change retailers every six months.
But the administration cost will go up. There will be more work and less revenue for the retailers.

They are entrepreneurs. They will adjust the prices up, citing higher costs, without adding value and everyone will pay more.

Four of the retailers opted out of the Jurong pilot. It would help if we knew the reasons for it.

The property analogy cited by the Energy Market Authority in reference to the possibility of retailers charging lower rates does not hold. The property market is unique to Singapore. The fuel market is global and beyond our control.

Many concerns over changes in power market - Ong Soon Yam
25 Sept 2018
I have always been of the view that energy and water supply should not be privatised, as these are essential everyday public utilities which have to be administered affordably to every household.

It was a surprise to learn that the energy supply will be left in the hands of 12 more retailers in addition to SP Group (All households, firms to get choice of power retailer; Sept 22).

I feel the authorities have not done enough public consultation on this issue.

A number of questions arise.

First, how does the public know which supplier to select? Besides looking at the price, what else are we expected to compare? How can consumers determine the quality of suppliers?

Second, why subject the public to the inconvenience of first having to choose a power retailer and then being expected to monitor the costs and service quality?

Users would be further inconvenienced if they end up switching from one retailer to another in order to take advantage of the best price on offer and service provided.

Third, how will the authorities handle disruptions and inconveniences to the public in situations such as power breakdowns or company closures should retailers fail to compete and suffer losses?

Fourth, the Energy Market Authority said the reason the new players can help users save on utility bills is that retailers' rates reflect the short-term costs that depend on current market conditions and the varying levels of competition.

This seems to suggest that consumers would have to watch the energy unit prices and try to gauge price trends, like with the stock market.

I am sure there are many other questions the public has.

I hope these concerns will be addressed in detail before the nationwide launch.

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