More contracts to be offered at fixed prices to large electricity consumers

Large electricity users include shopping malls and manufacturing facilities. ST PHOTO: KUA CHEE SIONG

SINGAPORE - A greater number of large electricity users in Singapore will be better protected in the volatile electricity market, with more contracts to be made available that will allow them to buy electricity at fixed rates.

The Energy Market Authority (EMA) first announced the Temporary Electricity Contracting Support Scheme in December last year. Eligible users could sign up and pay for electricity at a capped rate.

EMA said on Friday (Jan 28) that the scheme has been fully subscribed for January and February and that additional contracts for next month will be offered to consumers who also want to reduce their exposure to volatile electricity prices.

This comes after requests for more contracts by large electricity users, said EMA.

Consumers who have an average monthly consumption of 4 to 8 megawatt hours (MWh) will be offered one-month fixed price plans at preferred prices by Sembcorp Power.

Consumers who 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.

Large electricity users include shopping malls and manufacturing facilities. They use about 10 times the average monthly consumption of a four-room Housing Board flat.

EMA said the retailers will be offering about twice the capacity that was offered for this month, which is expected to meet the demand of most consumers.

Currently, large electricity users can buy electricity only from retailers or the wholesale market, where electricity prices fluctuate every half-hour.

Aside from these two options, households can also buy electricity from grid operator SP Group at the regulated tariff.

This has not been an option for large electricity users, as they have greater bargaining power to negotiate with retailers for better rates.

EMA said volatile gas and electricity prices and the risk of piped natural gas supply disruptions have limited the ability of electricity retailers to offer fixed price contracts to consumers.

"EMA had received feedback that some consumers are facing difficulties in renewing their contracts or obtaining new contracts, especially for the first quarter of 2022," said its spokesman.

For large consumers that do not have the option of switching to the regulated tariff, EMA will tap its standby liquefied natural gas (LNG) facility to offer them monthly fixed price plans.

This provides a viable option for companies that want to reduce their exposure to volatile electricity prices but face difficulties in securing electricity contracts, explained EMA.

To secure Singapore's electricity supply, EMA has also established a standby LNG facility, from which generation companies can draw to generate electricity when their natural gas supplies are disrupted. This is the same facility these companies draw fuel from under the Temporary Electricity Contracting Support Scheme.

EMA said it has also directed generation companies to maintain sufficient fuel for power generation, based on their available generation capacity for power generation from January to March.

A framework has also been introduced to require generation companies to manage their gas demand pre-emptively, so as to maintain power system security and reliability regardless of potential shortages in the wholesale market.

EMA will review if these measures are still needed by March 31.

The authority added that it 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," added EMA.

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