Union Power to drop 850 accounts; almost 150,000 customers hit so far by power retailer exits

ONE more electricity retailer in Singapore, Union Power said on Monday that it will cease some 850 retail accounts as part of a business reorganisation following exceptional increases in wholesale energy prices in the city state.

However, Union Power, an independent retailer, emphasised that it will not exit Singapore's electricity retail market.

Its statement follows back-to-back exits last week by iSwitch Energy - Singapore's largest independent retailer with 90,000 households accounts - and Ohm Energy with just under 30,000 accounts. Both retailers called it quits on their retail operations, citing market conditions and volatile electricity prices in recent months.

Two other retailers Diamond Electric and Best Electricity (this retailer has less than 20,000 accounts) have stopped renewing contracts for existing customers and are still mulling their options, which includes an exit.

The recent developments threaten to mar Singapore's liberalisation of the electricity market that began progressively and in earnest several years ago and was completed in 2019 with one out of two households switching out of the incumbent, SP Group as they coveted the cheaper electricity packages offered by 12-13 electricity retailers then.

But higher wholesale electricity prices of late that have shot through the roof on several occasions have hurt retailers' businesses, compounded further by an illiquid electricity futures market lately on the Singapore Exchange. Union Power's executive director Ellen Teo said: "This unprecedented and sustained price volatility has placed immense pressure on all IRs. Union Power has embarked on reorganisation with sadness as it values customer loyalty and relationships. This is a difficult but necessary step to ensure the financial viability of Union Power."

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The electricity provider said it will have some 20,000 residential accounts following the reorganisation, which form the majority of its clientele.

"The recent volatility in the global energy market has impacted the National Electricity Market of Singapore very significantly as local power generation relies largely on natural gas.

"The sustained spikes of the Uniform Singapore Energy Price (USEP) are due to a combination of factors and cannot be fully mitigated through hedging or participation in the electricity futures market," it added in a statement.

Customers affected by the reorganisation can appoint a new retailer or have their accounts transferred to SP Power. The transfers will take place by the close of business on Friday (Oct 22).

Due to the sustain price surges, the electricity retailer said it had to segregate customers according to levels of usage. Base load customers usually use a minimum and continuous amount of electricity on a typical 24-hour period with little change to their requirements. By contrast, peak load is less predictable and hence, more expensive.

Union Power is ceasing mostly peak usage accounts such as commercial customers, some of whom are in arrears. Customers not in arrears will receive payment from Union Power while most non-peak accounts such as residential households, will not be affected, it added.

READ MORE:

• Why are electricity providers in Singapore exiting the scene?

• Ohm Energy is the latest to switch off on Singapore's electricity retail ops

• EMA cites high demand, gas supply curbs for sharp spikes in Singapore's spot electricity prices

• Lights dim for 3 more power retailers amid record wholesale prices

• Singapore's largest independent electricity retailer iSwitch powers down