SINGAPORE - A scheme that was launched to help commercial electricity consumers purchase electricity at fixed prices to cushion them against the volatility of wholesale electricity prices will be suspended from May 1.

The Energy Market Authority (EMA) said in a statement on Monday that it will be discontinuing the Temporary Electricity Contracting Support Scheme (Trecs) in the light of global energy prices being less volatile in recent months, adding that the Government’s “emergency measures” have stabilised the electricity market.

More longer-term retail contracts are now also available to large consumers, it noted.

Under Trecs, which was launched in December 2021, EMA had worked with power generation companies (gencos) and electricity retailers to offer monthly fixed price plans or plans with a significant fixed price component for large consumers with an average monthly consumption of at least 4,000 kilowatt-hours (kWh).

During the height of the global energy crisis in 2021, around 11,000 business accounts, or 1 per cent of consumers, were purchasing electricity directly from the wholesale market – where prices change every half-hour.

Many of them were large users like coffee-shop operators and small and medium-sized enterprises (SMEs) with an average monthly consumption of around 4,000kWh. They were not able to secure a long-term fixed price plan that could guarantee stability after their electricity retailer exited the market.

This group can purchase electricity only from the wholesale market or retailers, and cannot pay for electricity at the regulated tariff offered by SP Group.

Trecs is thus a monthly scheme that allows these large electricity consumers to pay for electricity at a capped rate.

With the discontinuation of the scheme, EMA is encouraging consumers who are on Trecs, or purchasing from the wholesale electricity market, to consider entering into retail contracts for greater price certainty.

“This is to safeguard yourselves and your organisations against potential high and volatile wholesale electricity prices that could occur,” it added.

Under the Open Electricity Market, larger business consumers with an average monthly consumption of at least 2,000kWh can buy electricity from 15 licensed electricity retailers.

EMA said that it will be building on the lessons learnt from the recent energy crisis and introducing enhancements to strengthen the foundations of Singapore’s energy market.

For one thing, the standby LNG facility will be institutionalised to safeguard energy security, and gencos will be directed to the facility to generate electricity using gas if there are potential shortages in energy supply, the agency added.

EMA will also be tightening the regulatory requirements for electricity retailers to strengthen consumer protection, and is also exploring ways to obtain more secure and long-term gas contracts.

These enhancements will be progressively rolled out in the coming months, it noted.

“EMA will continue to monitor the situation closely and take the necessary steps to ensure our energy markets continue to function properly,” said the agency.

Consumers looking to sign up for the Trecs plan for April have until Friday to do so, EMA said on its website.

Those with an average monthly consumption of at least 4,000kWh can purchase their Trecs plan from Geneco, Keppel Electric and Senoko Energy Supply – as these retailers offer plans with a “significant fixed priced component”, which is capped at an electricity rate of 38.558 cents per kWh.

Those with an average monthly consumption of between 4,000kWh and 50,000kWh can purchase monthly fixed-price plans from Sembcorp Power and Keppel Electric.

Asked about the total electricity capacity made available through the scheme, Mr Jesse Chin, director of EMA’s market development and surveillance department, told The Straits Times that at the height of energy market volatility in March 2022, 924 contracts (totalling around 376MW) were entered under Trecs, compared with 10 contracts in February 2023 (totalling around 1.97MW).

Mr James Chong, who is commercial head at Senoko Energy, acknowledged that Trecs was a stop-gap measure introduced to address the lack of retail contracts. Now that gas supply has normalised, and retail contracts are readily available at competitive prices, Senoko has received a surge in queries from customers for these contracts.

Dr David Broadstock, a senior research fellow at the National University of Singapore’s Energy Studies Institute, said that the decision by EMA to phase out the temporary support scheme is no “cast-iron guarantee” that price volatility is a thing of the past.

However, it is a “clear statement of confidence” that the agency has isolated the most critical pressure points in the configuration of the power sector and its operations.

He noted that wholesale electricity prices are frequently well below the rate which Trecs is likely able to offer, an optimistic sign that prices have stabilised, and may even have room to decrease in the coming quarters.

Dr Broadstock noted that SMEs that are moving away from the Trecs scheme would need to determine whether a retail contract is more or less attractive than a return to wholesale market pricing.

“This decision has always been based on the appetite and ability of individual SMEs to cope with variable electricity prices,” he added.