SINGAPORE - Amid a continuing global energy crunch, the Energy Market Authority (EMA) is extending measures it had previously rolled out to secure Singapore's energy supply and stabilise energy prices to the end of March 2023, it said on Thursday (June 16).
At the same time, the EMA stressed that while it was unable to shield consumers from higher electricity prices, it was critical that the global volatility did not disrupt Singapore's electricity supply and impair the functioning of local energy markets.
The energy authority had in October last year put in place measures which included having a liquefied natural gas (LNG) facility on standby, directing power generation companies (gencos) to maintain sufficient fuel for power generation, as well as modified market rules. These rules enable the EMA to direct gencos to generate electricity preemptively using gas from the LNG facility - if there are potential shortages in energy supply in the Singapore wholesale electricity market - in order to maintain security and reliability in the power system.
The temporary measures were reviewed in March and extended till June 30 this year.
The EMA is also extending the Temporary Electricity Contracting Support Scheme (Trecs). The scheme cushions the impact of volatile prices in the wholesale electricity market on large electricity users, which include shopping malls and coffee shops.
Trecs was rolled out in January to help non-residential users consuming at least 4 megawatt-hour (MWh) of electricity get fixed-price plans from gencos.
The EMA said Sembcorp Power and Keppel Electric will continue to offer longer-term fixed price plans for consumers with average monthly consumption of 4MWh to 50MWh. The contracting window for July this year will open on Friday.
The authority added that it will continue to monitor the situation and consider extending the measures further if necessary, depending on the global energy situation and its impact on Singapore.
Singapore relies on imported natural gas for about 95 per cent of its electricity needs, and prices here have been increasing since September last year, in tandem with gas prices rising worldwide.
This was sparked by increased economic activity following a recovery from the Covid-19 pandemic, along with cold winter months globally that depleted natural gas reserves.
The Russia-Ukraine war has further exacerbated the risk of disruptions in gas and oil.
Russia supplies about 40 per cent of Europe’s gas requirements via pipeline, according to the International Energy Agency.
"Global gas prices have increased significantly due to high demand and tight gas supply. Energy markets are expected to remain volatile with the protracted conflict in Ukraine coupled with the seasonal increase in energy demand during the coming winter months," the EMA said in a statement, noting that countries in Asia and Europe have started to secure fuel supplies, including gas, in preparation for winter.
The EMA said that the measures have helped to ensure sufficient fuel and electricity supply and stabilised the Uniform Singapore Energy Price (USEP) to around the cost of electricity production.
The USEP, which reflects the real price of electricity and varies half-hourly depending on demand-supply dynamics in Singapore's wholesale market, was at an average of $350/MWh for the first five months of this year. In contrast, the USEP was $460/MWh on average in the last quarter of 2021.
Mr Ang Yuit, vice-president at the Association of Small and Medium Enterprises, said: “There is a lot of uncertainty in the market, especially with costs going up. At least under the Trecs scheme, electricity prices have stabilised somewhat, which is ultimately a good thing for businesses.”
He added that some businesses - particularly those in the food and beverage sector - that were on floating rate contracts have had to adopt measures such as turning off air-conditioners outside peak periods to manage electricity costs.
Mr Ang said that in the long term, more businesses would look into the energy efficiency of their operations.
He noted it would be helpful for the regulator or the Government to better communicate how it plans to mitigate such crises in the future. It could even consider making Trecs a standard operating procedure.
He noted that such clarity would give businesses some peace of mind in the light of the current global supply chain uncertainty.
Dr David Broadstock, senior research fellow and head of the energy economics division at the National University of Singapore’s Energy Studies Institute, supported the idea of making the suite of temporary measures part of a longer-term strategy.
He said: “I think one of the interesting questions the regulator needs to ask now is, what temporary really means and whether the measures which were put in place as a temporary response to certain market conditions may actually have a longer lifespan."
The EMA said that the Government will continue to support eligible consumers as they face the pressures of rising costs.
It added that the Household Support Package, introduced as part of Budget 2022, will help eligible households defray the costs of higher electricity bills. Businesses which need financing support can tap loan programmes offered by Enterprise Singapore.