SINGAPORE - The Energy Market Authority (EMA) on Saturday (Oct 16) said it was working closely with electricity retailers facing challenges amid what it called "exceptional circumstances" of volatile market conditions and surging fuel costs globally.
The electricity supply for all customers will not be affected as retailers look to suspend or cease operations, EMA stressed.
For retailers which intend to continue operations, the industry regulator is facilitating their efforts to hedge against future price volatility.
For those looking to suspend their operations, EMA is "open to" allowing them to do so by transferring their customers to national grid operator SP Group, while they strengthen their businesses and ease their customers' transition with ex-gratia payments.
Retailers ceasing operations entirely will also have their customers transferred to SP Group and EMA will ensure a smooth transition for them.
The authority's statement comes hot on the heels of two independent retailers, iSwitch and Ohm Energy, exiting the open electricity market (OEM) within three days of each other, citing volatile market conditions and unsustainable price plans.
iSwitch announced it was ceasing operations on Wednesday and Ohm did so on Friday.
At least two others, Best Electricity Supply and Diamond Electric, have stopped taking new customers.
All four retailers have not responded to media queries. The OEM's official price comparison tool now lists only plans offered by the eight other retailers.
EMA on Saturday noted that under the Code of Conduct for Retail Electricity Licensees, retailers wanting to exit the OEM are required to first approach other retailers to take on their customers under the same contractual terms and conditions.
If the departing retailer is unable to do so, its customers will be transferred to SP Group. These customers will pay the prevailing regulated tariff, though they also have the option to switch to another retailer of their choice.
"There will be no disruption to their customers' electricity supply," EMA said. "Retailers will not be allowed to charge customers an early termination fee. For household consumers, the retailers are required to refund any remaining security deposits after offsetting outstanding charges."
In the past fortnight, the Singapore Wholesale Electricity Market - where prices are determined every half-hour depending on prevailing demand and supply conditions - has experienced higher price volatility for sustained periods.
EMA explained that this was due to several factors.
First, there has been a global rise in prices for spot or real-time liquefied natural gas (LNG), driven by increased global demand for natural gas and a drop in natural gas and coal production.
Second, Singapore has seen a higher than usual electricity demand, with a new system peak demand of 7,667 megawatts recorded on Tuesday.
Third, there has been a reduction in the supply of piped natural gas from Indonesia.
Singapore relies on natural gas for more than 95 per cent of its energy needs, with supplies coming through pipelines from Indonesia and Malaysia and imported LNG.
Earlier this month, Minister for Trade and Industry Gan Kim Yong urged households to conserve electricity as he warned of rising costs and surging prices.
A week earlier, national grid operator SP Group announced that its regulated tariff for households would increase by 3.1 per cent from this month to December.
At 25.8 cents for every kilowatt hour, inclusive of the goods and services tax, the tariff is now priced at its highest since the first quarter of last year.
EMA noted that the regulated tariff and the fixed-price or discount-off-tariff plans offered by OEM retailers have cushioned most consumers from the impact of volatile market prices.
"OEM consumers may see an increase in electricity prices at the point of contract renewal, which reflects the increased costs of electricity production," the authority said. "However, electricity retailers which have under-hedged their positions may be exposed to the price volatility in the wholesale electricity market. Some may find it challenging to sustain their operations and may choose to exit the market.
"This is a consequence of their business decisions and can be expected in open and liberalised electricity markets, where participants may enter and exit the market, and market consolidation may occur," EMA added.
Enticed by the prospect of cheaper bills, one in two households has switched to an OEM retailer since the power sector was liberalised in 2018.
But the surging fuel costs of late have prompted retailers to up their prices by as much as 20 per cent over the last few months, rapidly narrowing the gap between their rates and regulated tariffs and potentially reducing savings made by consumers over the past few years.