SINGAPORE - Independent electricity retailer Union Power will be scaling down its operations by closing some retail accounts, but it will not exit Singapore's open electricity market.
About 850 of its customers - all of which are commercial customers - will be affected, the company said in a statement on Monday (Oct 18).
Most of its residential customers - the majority of its clientele - will not be affected, it added.
The affected customers can either appoint a new retailer by noon on Wednesday, or have their accounts transferred to SP Group by the close of business on Friday.
"Union Power will make the necessary arrangements to ensure minimal disruption of electricity supply," the company said.
Following the business reorganisation, Union Power will have a portfolio of about 20,000 accounts.
It said it has updated the Energy Market Authority (EMA), the industry regulator, on its decision.
Union Power's move comes after two retailers from Singapore's open electricity market - iSwitch and Ohm Energy - last week announced their exits, citing volatile market conditions and unsustainable price plans.
Of the 10 remaining retailers, at least two others are set for the exit door.
Union Power said on Monday that recent volatility in the global energy market has impacted Singapore's electricity market very significantly as local power generation relies largely on natural gas.
"The sustained spikes of the Uniform Singapore Energy Price (USEP) are due to a combination of factors and cannot be fully mitigated through hedging or participation in the electricity futures market," it said.
USEP is what buyers pay for energy in the wholesale market and reflects the real cost of electricity.
Union Power added that it had to segregate its customers according to their levels of electricity use.
For instance, base-load customers typically use a minimum and continuous amount of electricity over a 24-hour period with little change to their requirements.
On the other hand, peak-load customers' electricity use is less predictable, so their accounts are more expensive for Union Power to maintain.
This is why it is ceasing mostly peak-use accounts, such as those of commercial customers, some of which are in arrears, the company said.
"Where applicable and not in arrears, these customers will receive payment from Union Power," it said.
The company's executive director Ellen Teo said the unprecedented and sustained price volatility has placed pressure on all independent electricity retailers.
"Union Power has embarked on reorganisation with sadness as it values customer loyalty and relationships. This is a difficult but necessary step to ensure the financial viability of Union Power," she said.
"I would like to reiterate that Union Power remains active in the electricity retail market. We are committed to our long-term strategy, which includes participating in renewable energy activities, in line with the long-term vision of EMA, to make Singapore a greener and more sustainable city."