Within a span of about a week, three electricity retailers have announced their exit from Singapore's open electricity market.
On Tuesday, the Energy Market Authority (EMA), which regulates Singapore's energy supply, announced measures to safeguard the country's electricity supply amid a spike in gas prices globally.
How are these developments linked and what does it mean for consumers? The Straits Times answers your questions.
Q What is causing global electricity prices to spike?
A A confluence of causes has sent global market prices for gas soaring: increased gas consumption from recovering economic activity, severe weather events and a series of gas production outages. This in turn means that the cost of procuring gas for power-generating companies, or gencos, has increased.
Q What is the link between Singapore's power-generation companies and electricity retailers?
A The process of electricity generation and distribution involves four main players - gencos, retailers, the EMA and SP Group.
Gencos: There are seven main gencos in Singapore. These plants burn natural gas for energy, which is imported into Singapore through pipes from neighbouring countries or in a liquefied form from all over the world.
Gencos compete to sell electricity to retailers on the wholesale electricity market every half-hour.
Retailers: They buy electricity from gencos on the wholesale market and sell them to households. Before the electricity market was opened to households in 2018, they could buy electricity only from SP Group.
But the liberalisation of the market meant more choices of retailers for consumers. Those who did not make the switch continue to purchase electricity from SP Group at the regulated tariff rate.
Electricity retailers buy electricity and bundle these with other perks to entice consumers, such as green plans which offset electricity with carbon credits.
To manage the volatility of cost and earnings, retailers can either make these purchases at spot prices, or purchase contracts that allow them to buy electricity in the future at pre-determined rates.
However, Mr Howie Lee, an economist at OCBC Bank, told ST earlier that it is costly for a company to hedge fully, and that small power retailers are typically under-hedged compared with larger players.
EMA: The authority ensures a reliable and secure energy supply, and promotes effective competition in the energy market.
SP Group: The utility company is regulated by EMA. Besides being the default electricity retailer, it is Singapore's national grid operator and delivers electricity to consumers from gencos.
The folding of retailers iSwitch, Ohm Energy and Best Electricity can be attributed to the retailers' inability to keep up with the soaring prices of natural gas.
Q I have an existing deal with one of the retailers which exited. Am I at risk of losing my electricity supply?
A No. Besides being the national grid operator, SP Group is the retailer of last resort. Consumers who have contracts with retailers which have exited will be transferred to SP Group, which will charge for electricity at the regulated tariff rate.
Q How many retailers remain, and what are my options after I have been transferred back to SP Group?
A Besides SP Group, which about 51 per cent of residential consumers purchased electricity from as at April 30, nine retailers remain after the recent departures.
They are: Keppel Electric, Geneco, Tuas Power, Sembcorp Power, Diamond Electric, PacificLight Energy, Senoko Energy, Sunseap Energy and Union Power. Six of the retailers are linked to gencos - Keppel Electric, Geneco, Tuas Power, Sembcorp Power, PacificLight and Senoko Energy.
A full list of frequently asked questions by affected customers is available at spgrp.sg/OEMexit
