EMA to provide gencos standby fuel; may intervene in wholesale electricity market

THE Energy Market Authority (EMA) will set up standby fuel facilities on which power generation companies (gencos) can tap if needed. This will ensure that Singapore's electricity supply remains stable amid recent disruptions in the global energy market.

The move comes as Best Electricity on Tuesday became the third electricity retailer for the residential segment in Singapore to call it quits in a week, after iSwitch Energy and Ohm Energy.

In a press release on Tuesday evening, EMA said that it is working closely with all gencos to track their fuel supply levels and generating capacity. The authority will provide standby fuel to them if their gas supplies are affected or if there is a need to ensure reliable electricity supply to Singapore consumers.

In the event that there is a need to "maintain system stability", EMA will direct gencos to generate electricity using fuel from the standby facilities. The authority added that it is monitoring the Singapore Wholesale Electricity Market "closely and will intervene if necessary".

To complement the standby facilities, EMA has also informed gencos to contract sufficient fuel to at least meet the demands of customers of their retail arms. Gencos that are looking to sell their excess natural gas supply will have to provide other gencos and EMA with the first right of refusal, before they can divert or onsell the excess gas to other parties.

"These pre-emptive measures are extraordinary but necessary to secure our fuel and electricity supply," said EMA in its press release. It will review if the measures are still needed by March 2022.

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"During this period, we urge consumers to conserve energy where possible. EMA will continue to monitor developments in the global and domestic energy sector closely, and will introduce further measures if necessary," it added.

Global market prices for natural gas are at an all-time high due to increased gas consumption from recovering economic activity, severe weather events, gas production outages and low inventory levels in the major economies for their coming winter season.

Around 95 per cent of electricity is generated from imported natural gas in Singapore. The global energy crunch has made it much more expensive for the gencos to secure additional spot liquefied natural gas (LNG) to make up for the drop in piped natural gas supplies, EMA noted.

"Electricity retailers who have under-hedged their positions may be exposed to the volatility in the wholesale electricity market. They may now find it challenging to sustain their operations, and may choose to exit the market," it said.

EMA said that it will ensure a smooth transition for customers of retailers who choose to exit. Customers will not face any electricity supply disruption, and retailers will not be allowed to charge an early termination fee. Household consumers will have their security deposits returned to them after outstanding charges are offset.

READ MORE:

• One more retailer - Best Electricity - bites the dust in Singapore's hard-hit electricity market
• Why are electricity providers in Singapore exiting the scene?
• Lights dim for 3 more power retailers amid record wholesale prices
• Singapore’s largest independent electricity retailer iSwitch powers down
• Electricity retailers in Singapore hike rates amid surge in spot prices
• EMA cites high demand, gas supply curbs for sharp spikes in Singapore’s spot electricity prices