Large businesses can get fixed price electricity plan for Jan 2022 under new temporary scheme

SINGAPORE: Large businesses will be able to get a one-month fixed price electricity plan for January 2022, under a new temporary scheme that aims to help them secure contracts amid "unprecedented volatility" in the electricity market.

The scheme, announced by the Energy Market Authority (EMA) on Monday (Dec 13), comes as global gas prices have risen to “record levels” over the past few months, due to unanticipated demand and disruptions in supply.

EMA noted that most consumers are not affected by the price volatility in the wholesale electricity market, as they are on standard price plans or the regulated tariff rate.

Only about 1 per cent of consumers – or some 11,000 accounts, most of which are business accounts – are exposed to this volatility, as they buy directly from the wholesale market.

But there has been feedback that some large businesses are having trouble renewing or getting new contracts, especially for the next three months, it said.

“The volatile gas and electricity prices, and risk of (piped natural gas) disruptions, have limited the retailers’ ability to offer fixed price contracts.”

To address this, the Temporary Electricity Contracting Support Scheme (TRECS) allows generation companies, or gencos, to draw on EMA’s standby fuel facility to generate electricity – thus reducing the risk that disruptions might present to them.

The three retailers participating in TRECS are: Geneco (by Seraya Energy), Sembcorp Power and Senoko Energy Supply. They have collectively offered around 300 megawatts of power capacity for the scheme.

To qualify, large consumers are defined as those who have an average monthly consumption of at least 4 megawatt-hour.

EMA added that it is not compulsory to participate in this scheme, and large consumers should “continue to engage retailers on alternative pricing arrangements that best suit their needs”.

The sign-up period is from Dec 15 to Dec 27, 3PM. The authority said it will consider extending the scheme if there is demand in the months ahead.

OTHER MEASURES TO ENHANCE ENERGY SECURITY

The move comes after several electricity retailers ceased operations in Singapore in October. EMA said then that it was working closely with electricity retailers facing challenges, given the “exceptional” circumstances in the energy market.

The authority also reiterated other “upstream measures” it has put in place to secure electricity supply.

This includes establishing a standby Liquified Natural Gas (LNG) facility, which gencos can draw from to generate electricity when their natural gas supplies are disrupted. It is the same facility from which they may draw fuel for TRECS.

To “complement” the standby facility, EMA said it has also directed gencos to procure sufficient fuel to generate electricity based on their available generation capacity from Jan 1 to Mar 31, 2022.

This is on top of the existing requirement of having fuel reserves that they must maintain under their licences.

In addition, any genco that wishes to sell excess fuel to any third-party, must notify EMA of their intent to do so.

Third, there are also measures to better manage the gas network pressure, it said. This comes as "ongoing upstream production issues in Indonesia’s West Natuna gas fields and low gas landing pressure from South Sumatra are expected to continue to affect the PNG supply into Singapore”.

Finally, EMA said it intends to direct gencos to generate electricity using fuel from the standby fuel facilities “pre-emptively”, if there are potential energy supply shortages in the wholesale electricity market.

“EMA has consulted the gencos on the framework and will be issuing a final determination soon.”

These measures will be reviewed to see if they are still needed by Mar 31.

CONSERVE ELECTRICITY

Second Minister for Trade and Industry Dr Tan See Leng said Singaporeans cannot be completely insulated from the higher prices, amid the global energy crunch.

“But we can and will continue to ensure that consumers have access to the electricity supply and plans they need. TRECS is another step in this direction,” he said.

“We will also help vulnerable consumers cope with the higher costs. We hope that consumers can also help us in conserving electricity use where they can.”