EMA to offer scheme for large businesses to secure fixed price electricity plan

LARGE businesses facing difficulties securing retail contracts amid "unprecedented volatility" in the electricity market will be able to get 1-month fixed price plans for January 2022 under the Temporary Electricity Contracting Support Scheme (TRECS) launched by the Energy Market Authority (EMA).

"The volatile gas and electricity prices, and risk of piped natural gas disruptions, have limited the retailers' ability to offer fixed price contracts," said EMA in a press statement on Monday (Dec 13).

However, most consumers are not affected by the price volatility given that they are on standard price plans with retailers or on the regulated tariff rate, EMA noted.

Only around 1 per cent of consumers buy electricity directly from the wholesale market and are exposed to the volatile prices, said EMA.

To address this, EMA has worked with generation companies (gencos) and electricity retailers to offer the 1-month fixed price plans for January 2022.

Gencos will be able to draw on EMA's standby fuel facility to generate electricity in order to reduce the risk that piped natural gas disruptions may present to them.

The 3 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.

It is not mandatory for businesses to participate in the scheme and they should continue to engage retailers on alternative pricing arrangements that best suit their needs, said EMA. The sign-up period is from Dec 15 to Dec 27, 3pm. EMA added that it will consider extending TRECS if there is demand in the months ahead.

The move comes after electricity retailers faced extraordinary spikes in spot electricity price. Five players went out of business amid volatile prices and inability to hedge risks on the futures market.

In its press statement, EMA had also outlined upstream measures that had been put in place to secure electricity supply.

EMA had established a standby liquefied natural gas facility (SLF), which gencos can draw from to generate electricity when their natural gas supplies are disrupted. This is the same facility which gencos draw fuel for TRECS.

Gencos are also directed to maintain sufficient fuel for power generation, based on their available generation capacity for power generation from Jan 1, 2022 to Mar 31, 2022. This is in addition to the existing requirement of having fuel reserves that they must maintain under their licences.

To add, measures have been put in place to better manage the gas network pressure. This is 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 piped natural gas supply into Singapore, according to EMA.

To maintain power system security and reliability, EMA will direct gencos to generate electricity using the gas from the SLF preemptively, in the event that there are potential shortages in energy supply in the wholesale electricity market.

"EMA has consulted the gencos on the framework and will be issuing a final determination soon," it said.

The authority will review if these measures are still needed by Mar 31, 2022.

Said Second Minister for Trade and Industry Tan See Leng: "The world is undergoing an energy crunch and electricity prices are rising in many countries. We cannot insulate Singaporeans completely from the higher prices. 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. 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."

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