Some SMEs struggle to get fixed price plans for power

Stiff competition among large electricity users to secure fixed price plans has left some small and medium-sized enterprises (SMEs) worried amid a volatile wholesale electricity market rocked by the global electricity crunch.

Fixed price plans are offered by electricity retailers under the Open Electricity Market at a flat rate per kilowatt hour (kWh) for a period of time.

Unlike households, large users, which refers to those who consume a monthly average of at least 4,000kWh, can buy electricity only from retailers or the wholesale market - where electricity prices fluctuate every half-hour.

Eurasia Global Food chief executive Kelvin Ong told The Straits Times that his electricity bill of about $70,000 for the company's factory and food and beverage outlets is set to increase by six times once his current plan ends next month.

After contacting other suppliers, his sole offer from another retailer will double his current costs and starts only in July, he said last Thursday.

Last October, when the energy crisis reverberated worldwide, including in Singapore, the average wholesale market rate shot up to almost 50 cents per kWh. It was about 16 cents per kWh in the month before.

The rates for fixed price plans offered by electricity retailers have drastically increased as well, with Mr Ong saying he was quoted rates of 35 cents per kWh and 57 cents per kWh.

In part, the competition to secure fixed price plans is compounded by the closure of five electricity retailers last year. Several left because they under-hedged their positions and were exposed to price volatility in the wholesale market when the global energy crunch hit.

This has left some large electricity users like bespoke tailor CYC, formerly contracted with i-Switch that shut down last November, still searching for a fixed price plan that lasts beyond one month.

Mr Gerald Teo, chief executive of beauty business Citispa, said four suppliers have turned him away, citing full capacity.

Hawker Benjamin Tong, whose landlord purchases electricity from the volatile wholesale market, has raised prices for customers and cut salaries for himself and his two staff after being unable to further absorb the steep electricity prices.

Mr Tong, who sells traditional stone-milled chee cheong fun, said: "We were caught off guard in December when the electricity rate jumped from 26 cents to 68 cents, so the bill rose from about $100 to around $450."

He has taken to preparing his food in near-darkness by relying on just the lights of the coffee shop. "There's only so much we can save because our fridges and freezers can't be switched off."

Mr Steven Koh, executive director of the Singapore Precision Engineering and Technology Association, encouraged SMEs to optimise their energy usage, move to high-margin activities, and expedite the adoption of renewable energy to manage the increase in energy cost.