More contracts with fixed prices to be offered to large electricity consumers: EMA

THE Energy Market Authority (EMA) on Friday (Jan 28) announced that more contracts with fixed prices will be offered to large electricity consumers who do not have the option of switching to the regulated tariff.

These price plans provide a viable option for companies which want to reduce their exposure to volatile electricity prices but face difficulties in securing electricity contracts, said EMA.

EMA said it has received feedback that some large businesses are facing difficulties in renewing their contracts or obtaining new ones, especially for the next 3 months.

Volatile gas and electricity prices, and risk of piped natural gas (PNG) disruptions, have limited the retailers' ability to offer fixed price contracts.

The authority first introduced the Temporary Electricity Contracting Support Scheme (TRECS) in December last year, for businesses that consume more and would like to be on retail price plans. Under this scheme, eligible users could sign up and pay for electricity at a fixed rate under 1-month fixed price plans for January 2022.

EMA noted that the quantums of contracts under the TRECS for January and February have been fully subscribed.

In response to requests for more contracts, EMA said that additional contracts for February will be offered to consumers who want to cut their exposure to volatile electricity prices.

Consumers with an average monthly consumption of 4 to 8 megawatts hours (MWh) will be offered 1-month fixed price plans at preferred prices by Sembcorp Power. Consumers that have an average monthly consumption of more than 8 MWh will be offered contracts with a significant fixed price component by Sembcorp Power, Senoko Energy Supply, Geneco, and PacificLight Energy.

The retailers for the TRECS scheme will be offering about double the capacity compared to January. This is expected to meet the demand from most consumers, said EMA.

EMA noted that in recent months, global gas prices have risen to record levels due to unanticipated demand for gas and reductions in global gas supply. In Singapore, this has been compounded by episodes of PNG disruptions, leading to unprecedented volatility in the Singapore Wholesale Electricity Market (SWEM).

Most consumers are not affected as they are either on the regulated tariff or on standard retail price plans. Just 1 per cent of consumers buy electricity directly from the SWEM and are exposed to the volatile prices.

Meanwhile, EMA has put in place measures to secure Singapore's electricity supply.

It has established a Standby LNG Facility (SLF), which gencos can draw from to generate electricity when their natural gas supplies are disrupted. This is also the same facility where gencos draw fuel for TRECS.

EMA has also directed gencos to maintain sufficient fuel for power generation, based on their available generation capacity for power generation, from Jan 1 to Mar 31, and put in place better measures for gas network pressure, since 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.

The authority has also put in place a framework to direct gencos to generate electricity using gas from the SLF pre-emptively, if there are potential shortages in energy supply in the wholesale market.

EMA said it will review whether these measures are still needed by end-March.

"EMA is committed to ensuring that Singapore's power supply remains secure and reliable. We will continue to monitor market developments and review or introduce further measures if necessary. At the same time, all consumers are encouraged to do their part to conserve energy where possible," it added.