Open Electricity Market Encourages Competition and Innovation
16 Mar 2019
We thank Mr Cheng Choon Fei for his letter, “Electricity retailers should offer innovative, transparent packages” (ST, 9 Mar), urging retailers in the Open Electricity Market (“OEM”) to be more innovative and transparent in their offers.
To simplify choices for consumers, the Energy Market Authority (EMA) requires OEM retailers to offer Standard Price Plans. Such plans come in 6-, 12- or 24-month durations, with all-inclusive electricity rates for ease of comparison. A Price Comparison Tool is also available at compare.openelectricitymarket.sg to help consumers compare all Standard Price Plans offered by retailers. Retailers can also offer other innovative packages, but they must clearly highlight to the consumer that these are non-Standard Price Plans.
There are retailers who offer various types of price plans ranging from green energy options to those with tie-ups with other service providers such as telecommunications companies, insurance companies and banks. For such bundled services, EMA requires retailers to clearly state the electricity rate and clearly specify the charges for the individual services.
To further safeguard consumers’ interest, retailers are required to obtain consumers’ acknowledgement that they have read their selected price plan’s Fact Sheet, which highlights the plan’s key terms and conditions. Retailers are also required to inform their consumers at least 10 business days before their contracts expire or are due for renewal. Consumers can choose whether to renew their contract, switch to another retailer or to SP Group.
Dorcas Tan (Ms)
Market Development and Surveillance Department
Energy Market Authority
Electricity retailers should offer innovative, transparent packages - Cheng Choon Fei
9 Mar 2019
I notice that electricity retailers are fond of using marketing gimmicks like free electricity and cash rebates to sway consumers.
Those who take the time to compare between retailers often find that the net price ends up being more or less the same.
Retailers need to offer more innovative packages. For example, a retailer could offer free installation and maintenance of solar panels in return for a fixed contract. The power generated could be stored in a battery and fed into the grid, benefiting the retailer.
Retailers could also explore an "all-you-can-eat" tariff, where they use a customer's historical consumption data to determine a fixed amount the customer pays in return for unlimited electricity consumption - like that offered by Centrica, a British multinational energy and services company.
Customers also often find packages to be too opaque. Discounts can obscure the actual price a consumer is paying for electricity.
And bundling electricity use with another product such as a phone line can make it difficult for a customer to distinguish between what he is paying for electricity and what he is paying for the other product.
Consumers want tariff structures that are less, not more, complex.
The authorities should require retailers to inform consumers exactly how much they are paying under "discount" deals, and to advertise in ways that make prices easier to compare.
They should require retailers to give adequate warning to consumers when a contract is about to expire, and inform them how much they would have to pay if they decide not to act on the expiring contract.
The authorities should also encourage retailers to provide data on their profit margins to an independent body.
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