SINGAPORE - Retailers in the Open Electricity Market are "thoroughly vetted and have to satisfy a stringent set of requirements" before they can serve customers, said Senior Parliamentary Secretary for Trade and Industry Tan Wu Meng.

He also noted on Monday (March 4) that when retailers exit the market for any reason, they must pass on their customers to other power sellers at the same terms and conditions.

Dr Tan told the parliamentary debate on his ministry's budget: "Under the Open Electricity Market, households and small businesses now have more choices.

"At the same time, we will ensure that consumers' interests are protected."

Dr Tan was responding to a question by Workers' Party chief Pritam Singh (Aljunied GRC), who asked what had gone wrong with electricity retailer Red Dot Power, which had gone through the regulatory process.

Red Dot Power left the Open Electricity Market in January on the back of what it termed a "financially challenging period".

It had signed up around 3,000 customers - including 120 households - and all accounts had to be transferred back to the government-owned SP Group.

Electricity prices offered on the open market by these retailers are typically lower than SP Group's rates.

Mr Singh said that the Aljunied-Hougang Town Council had also contracted Red Dot Power as an energy provider. He asked what recourse households would have if electricity retailers unilaterally decided to terminate their contracts.

Dr Tan said in response that the Energy Market Authority has safeguards to prevent firms from unilaterally terminating contracts unless consumers breach contract terms or if the retailer leaves the electricity market.

When retailers leave the market, they must also return any security deposits to households, said Dr Tan.

Mr Singh later asked if there would be any compensation to customers if the exiting retailer was unable to find an alternative supplier at the same price.

Dr Tan said there is no loss, as households would have obtained savings from getting discounted rates with the retailer up to the point that they exit the market.

"From the viewpoint of a household consumer, one of the key objectives in the Open Electricity Market is that in the event a retailer exits, that household continues to receive electricity, the power is not disconnected," he added.

The exiting retailer should try to find an alternative supplier with the same terms, with SP Group as the "last resort" if it fails.

Even then, the consumer still has the choice to pick another supplier, Dr Tan said.