Has Open Electricity Market led to unnecessary cost and confusion?

It is quite clear that the wholesale electricity price has dropped due to overcapacity and overproduction.
It is quite clear that the wholesale electricity price has dropped due to overcapacity and overproduction.PHOTO: ST FILE

With the new Open Electricity Market, retail customers now have the option of choosing their electricity supplier and enjoying a lower price. This is supposed to be good news for consumers.

However, many remain confused. They do not know which supplier to buy from and find it difficult to decide on whether to accept a plan that offers a discount from the Singapore Power price or to go for a fixed rate for a specified period of, say, 12 months.

They are consumers, and not speculators. Why give them this difficult decision?

Often, in the shopping malls, I have seen teams of young people marketing the electricity plans offered by the different providers. Based on rough estimates, there could be several hundred people involved in this marketing exercise.

After a consumer decides on a new provider, the supplier also has to do some work to register the provider, set up the billing and invoicing system and arrange for a meter reading, among others.

Does all of this work help to improve productivity or reduce the cost of the electricity that is produced? It seems that the answer is no. Instead, they just add to the administrative, marketing and customer service costs, which must result in a higher overall cost.

So, what is the alternative?

It is quite clear that the wholesale electricity price has dropped due to overcapacity and overproduction.

It should be quite easy for the Government to get Singapore Power to reduce the retail electricity price to match the average wholesale electricity price.

This will avoid the wasteful exercise, which has added a lot of unnecessary cost and confusion.

This is also not a one-time cost, as, when the contract expires, the consumer and supplier will have to go through the whole trouble of negotiating and renewing the contract once again.

Tan Kin Lian

A version of this article appeared in the print edition of The Straits Times on April 08, 2019, with the headline 'Has Open Electricity Market led to unnecessary cost and confusion?'. Print Edition | Subscribe