Singapore's electricity retailer UGS Energy is the latest to bow out
AS SPOT prices in Singapore's electricity market continue to be elevated, one more electricity provider for businesses, UGS Energy, threw in the towel on Thursday.
Its exit follows the recent exits of two others, SilverCloud Energy and Valueenergy, who were also retailers for commercial consumers in the city state.
In a note posted on its website, UGS said it had entered the Open Electricity Market (OEM) with the key objective of helping consumers enjoy the benefits from an open and competitive market. "However, recent market conditions have made it challenging for us to sustain our business. Thus, we regret to inform that we will be exiting the market with effect from Oct 27, 2021," it said.
On Monday, Union Power said it will rejig its business and let go of 850 retail accounts while continuing "business-as-usual" with most residential customers, which make up some 20,000 accounts. It cited sustained hikes in wholesale energy prices for the move, but stressed that it was not exiting the electricity retail market.
Extraordinary spikes in Singapore's electricity prices in the wholesale market since July and the inability to hedge in the local futures market as volumes dried up have hurt retailers and their ability to price their packages competitively in order to retain existing customers and gain new ones.
While volumes on Singapore Exchange's electricity futures market rose in July and August, continued volatility and surging spot prices have led to losses among market makers, say industry insiders. This in turn has curbed hedging options for retailers at a time when they desperately need to offset such volatility risks.
In the household segment, which covers 1.4 million accounts, at least three retailers - iSwitch Energy, Ohm Energy and Best Electricity - have announced cessations of their retail operations.
