Public Consultation on Proposed Amendments to the Gas and Electricity Acts

Introduction

1.         The Ministry of Trade and Industry ("MTI”) and the Energy Market Authority ("EMA”) are seeking public feedback on the draft Gas (Amendment) Bill and the draft Electricity (Amendment) Bill.  The public consultation period is from 22 June 2018 to 16 July 2018. The proposed amendments are to enable more effective regulation of the gas and electricity markets, to enhance the security and reliability of gas and electricity supply, protect critical infrastructure and enhance competitiveness in Singapore’s energy market.

Background

Gas and Electricity Acts

2.         The Gas and Electricity Acts were enacted in 2001 to (i) establish a competitive market framework for the gas and electricity industries, and (ii) provide for the safety, technical and economic regulation of the transportation and retail of gas, as well as the generation, transmission, supply and use of electricity. The Electricity Act was last amended in 2006 to enhance the regulation and licensing of electricity transmission while the Gas Act was last amended in 2007 to enhance regulation and introduce competition in the gas import, shipping and retail sectors.

3.         Since then, the gas and electricity sectors have evolved and there is a need to update the Acts to ensure their continued relevance. Today, Singapore is heavily reliant on imported natural gas, which generates about 95% of our electricity. New initiatives such as the Open Electricity Market which enables all consumers to choose their electricity retailer will also affect the energy landscape. The proposed changes will allow EMA to enhance the security, reliability, and competitiveness of our gas and electricity supplies.

Proposed legislative changes

4.         MTI and EMA are proposing to amend the Gas and Electricity Acts as per the draft Gas (Amendment) Bill and the draft Electricity (Amendment) Bill as set out in Appendix 1 and Appendix 2 respectively. The key amendments are explained below.

Amendments to the Gas Act

Safeguarding gas supply security and safety

5.         Powers to deal with emergencies. To enable proactive measures to avert gas supply emergencies/disruptions, MTI proposes to expand the scope of the Gas Act to enable EMA, with the approval of the Minister, to issue directions to licensees and other parties to take measures to safeguard gas supply, in the event of a potential, imminent or actual severe gas shortage that threatens energy security or system stability or that is likely to result in severe loss of electricity supply or industrial output. Such directions will only be issued in emergencies, and affected parties will receive compensation, which will be determined by an independent pricing panel.

6.         Expanding EMA’s functions under the Gas Act to deal with dangers to health arising from the import of gas. EMA’s present regulatory role includes protecting the public from dangers arising from the production, supply and use of gas. To cover activities across the entire value-chain, MTI proposes to expand EMA’s functions to include protecting the public from dangers to health arising from gas-related activities, including the import of gas.   

7.         Expanding the list of "designated gas licensees”. Under the Gas Act, EMA’s approval is required for changes in ownership and board/chief executive officer appointments of "designated gas licensees”. Presently, the gas transporter licensee (responsible for the management and operation of the gas transmission system) and its agent licensee are classified as "designated gas licensees”. As liquefied natural gas (LNG) supply is critical in ensuring energy security, MTI proposes to amend the Gas Act to add the LNG terminal operator (currently Singapore LNG Corporation Pte Ltd) as a "designated gas licensee” and to enable the Minister to specify other "designated gas licensees” and revise the list of "designated gas licensees” via Gazette, moving forward, to provide flexibility in designating critical licensees as the gas industry evolves.

8.         Clarifying EMA’s regulatory functions. In line with EMA’s mandate to ensure security and reliability of gas supply, MTI proposes to amend the Gas Act to (i) clarify that EMA’s regulatory functions include the supervision, monitoring and arranging for the secure operation of the gas transmission system, which EMA already performs, and (ii) enable EMA to enter into contracts in performing these functions, and recover costs for services provided.

Enhancing EMA’s regulation-making powers for the conversion of the town gas pipeline network to convey natural gas

9.         MTI proposes to amend the town gas conversion regulation-making powers under the Gas Act to enable gas licensees carrying out the conversion to obtain relevant information from relevant parties to facilitate timely and safe execution of the conversion of the town gas pipeline network to convey natural gas ("town gas conversion”) in the future, if necessary.

Amendments to the Electricity Act

Enhancing security and reliability of electricity supply

10.      The electricity transmission licensee, viz. SP PowerAssets Ltd ("SPPA”), owns and manages the electricity transmission system that transmits electricity from generation companies to consumers. To expand the electricity transmission system capacity to meet increased electricity demand over time, and to ensure security and reliability of electricity supply to consumers, SPPA may need to connect its electrical equipment[1] to the electrical equipment of other electricity licensees, to increase electricity transmission capacity for purposes of supplying electricity to consumers.

11.      MTI therefore proposes to amend the Electricity Act so that where EMA considers that such a connection is necessary for the expansion of the transmission network, EMA will be able to issue directions to the transmission licensee and the electricity licensee to effect the connection, subject to reasonable terms of connections to be agreed. If the transmission licensee and the electricity licensee are unable to agree on the terms of connection, EMA will be empowered to direct the transmission licensee and electricity licensee to effect the connection on terms that EMA considers reasonable.

12.      Clarifying EMA’s regulatory functions. EMA currently performs the role of power system operator as part of its regulatory function in arranging for the secure operation of the electricity transmission system under the Electricity Act, and recovers its administrative costs from the electricity market through the Electricity Market Rules and regulatory contracts entered into with electricity licensees. MTI proposes to amend the Electricity Act to make clear that EMA may enter into regulatory contracts in relation to its functions and recover costs for services provided.

Protecting consumers’ interests

13.      Expanding regulatory regime relating to unlicensed persons carrying out electrical works. To enhance protection of consumers’ interests when they engage electrical workers to carry out electrical works at their premises, MTI proposes to amend the Electricity Act to expand the regulatory regime relating to persons carrying electrical works without valid electrical worker licences, to also make it an offence for firms to provide services involving electrical work to consumers using unlicensed electrical workers. The penalty for such offences carries a maximum fine of $10,000 and/or 1-year imprisonment term and in the case of a continuing offence, to a further fine not exceeding $250 for every day or part thereof during which the offence continues after conviction.            

14.      Clarifying the rights of small contestable consumers. MTI proposes to amend the Electricity Act to clarify, for the avoidance of doubt, that small contestable consumers[2] may apply to cease their status as contestable consumers and purchase electricity at regulated tariffs, if (a) they cannot or do not want to purchase electricity from electricity retailers or directly from the wholesale electricity market, or (b) the electricity retailer supplying electricity to them is unable or refuses to retail electricity to them for any reason. This will make clear the present arrangement, in line with the Electricity (Contestable Consumers) Regulations.

Amendments that apply to both the Gas and Electricity Acts

Protection of submarine electricity cables and gas pipelines

15.      Submarine electricity cables within Singapore’s territorial waters transmit electricity between Jurong Island and Singapore island as well as other islands where electricity supply is needed. Submarine gas pipelines convey imported natural gas from Malaysia and Indonesia to our gas pipeline network. Damage to these cables/pipelines can disrupt Singapore’s electricity and gas supply and cause severe economic repercussions. Therefore, there is a need to protect such critical infrastructure. MTI proposes to make it an offence for any person to damage any submarine electricity cable or gas pipeline and empower the court to impose a fine of up to $2m and/or imprisonment of up to 5 years.     

Enhancing protection of land-based electricity and gas infrastructure

16.      Presently, it is an offence, under the Gas and Electricity Acts, to damage a high voltage cable in the electricity transmission network or a gas plant or gas pipe in a gas pipeline network during earthworks. To enhance the protection of these critical electricity and gas infrastructure, MTI proposes to amend the Gas and Electricity Acts to provide that it will be an offence to damage or cause or permit such electricity or gas infrastructure to be damaged. The penalty for these offences is a maximum fine of up to $1m and/or imprisonment of up to 5 years.   

Enhancing deterrence in relation to dishonest/fraudulent consumption of gas and meter tampering offences

17.      Presently under the Gas and Electricity Acts, dishonest/fraudulent consumption of gas/electricity carries a maximum fine of $50,000 and/or 5-year imprisonment term. This is insufficient to deter large scale dishonest/fraudulent consumption. MTI therefore proposes to introduce an additional penalty of 3 times the value of gas or electricity dishonestly/fraudulently consumed on offenders convicted in court, and require the offender to make compensation for the value of gas/electricity consumed.

18.      MTI also proposes to enhance the existing meter tampering offences in the Gas Act and Electricity Act by making it an offence for any person to do anything which affects the ability of a meter to meter gas or electricity supplied to premises or the proper operation of the meter. This will enable EMA to prosecute offenders who use novel or unconventional methods to carry out meter tampering. The penalty for such offences will be similar to the penalty for dishonest/fraudulent consumption of gas or electricity highlighted in Para 17 above (i.e. $50,000 and/or 5-year imprisonment term and an additional penalty of 3 times the value of gas or electricity dishonestly/fraudulently consumed).

Provision for issuing of guidelines on anti-competitive practices and conduct

19.      To augment existing provisions in the Gas and Electricity Acts that empower EMA to regulate anti-competitive practices and conduct in the gas and electricity markets, MTI proposes to amend both Acts to enable EMA to issue guidelines to inform market participants on practices and conduct that are deemed anti-competitive. This is in line with similar provisions in the Competition Act relating to anti-competitive practices and conduct in other markets in Singapore.   

Clarifying appeals to the Minister in relation to EMA’s regulatory decisions

20.      To ensure that appeals to the Minister in relation to EMA’s regulatory decisions are clearly articulated and well-substantiated, MTI proposes to amend the Gas and Electricity Acts to include criteria to require appellants to set out concisely the circumstances, issues and grounds of appeal and submit all relevant facts, evidence and arguments when submitting appeals to the Minister, and to enable Minister to reject appeals if these criteria are not met. This will preclude appeals that lack basis. MTI also proposes to amend the Gas and Electricity Acts to provide for the safeguarding of confidential and sensitive information submitted in appeals. This is in line with other Acts such as the Telecommunications Act, Civil Aviation Authority of Singapore Act etc.

Regularising provisions in both the Gas and Electricity Acts

Aligning and updating similar regulatory provisions in the two Acts

21.      Emergency powers. The Electricity Act empowers the Minister to make a "Special Administration Order” ("SAO”) in relation to the management of the affairs, business and property of any electricity licensee in the event of a public emergency and in certain situations[3]. The Gas Act limits the SAO only to the gas transporter and LNG terminal operator licensees. MTI proposes to align these provisions of the Gas Act with those of the Electricity Act, to empower the Minister to be able to make a SAO in relation to any gas licensee. This will enable a SAO to be issued in relation to the management of a gas licensee’s business in the event of a public emergency or similar situations to ensure the security and reliability of gas supply.

22.      Licensable electricity-related activities. The regulatory and licensing framework in the Gas Act currently enables the Minister to specify, by order published in the Gazette, new gas-related activities that need to be regulated and licensed to ensure gas supply security, reliability and safety. MTI proposes to align the provisions of the Electricity Act with these provisions of the Gas Act to enable Minister, by order published in the Gazette, to specify new electricity-related activities that need to be licensed and regulated.

23.      Acquisition and divestment controls. To ensure consistency in the ownership, acquisition and divestment controls over gas/electricity licensees in both the Gas and Electricity Acts respectively, MTI proposes to amend these provisions in the Electricity Act to be in line with those in the Gas Act, as the latter are more detailed and comprehensive. 

24.      Duties of persons carrying out earthworks. To ensure that the duties of persons carrying out earthworks are consistent in both the Gas and Electricity Acts, MTI proposes to amend these provisions in the Electricity Act to be in line with those in the Gas Act, as the latter is broader in scope. 

Request for Comments and Feedback

25.      MTI and EMA invite parties to provide their views and comments on the draft Gas (Amendment) Bill and the draft Electricity (Amendment) Bill as set out in Appendix 1 and Appendix 2 respectively by 16 July 2018. Electronic submission is encouraged. Please use the template in Appendix 3 for your submission and send it to mti_feedback@mti.gov.sg.

26.      Please note that all submissions received will be published and attributed to the respective respondents unless they expressly request MTI not to do so. As such, if respondents would like (i) their whole submission or part of it, or (ii) their identity, or both, to be kept confidential, please expressly state so in the submission to MTI. In addition, MTI reserves the right not to publish any submission received where MTI considers it not in the public interest to do so, such as where the submission appears to be libellous or offensive.

27.      Please note that the draft amendments to the Gas and Electricity Acts are released only for the purpose of consultation and does not represent the final legislation. All comments received during the consultation exercise will be reviewed thoroughly and, if accepted, will be incorporated into the Bills for introduction in Parliament.

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Appendix 1 Draft Gas Amendment Bill.pdf

Appendix 2 Draft Electricity Amendment Bill.pdf

Appendix 3 Format for Submission of Comments and Feedback.pdf

[1] Electrical equipment could be in the form of any line, plant, apparatus or appliance used for the supply of electricity.

[2] "Small contestable consumers” refers to contestable consumers whose average monthly electricity consumption for the preceding continuous 12-month period is less than 4MWh.

[3] Under section 34(2) of the Gas Act, the Minister may make a SAO on the occurrence of a public emergency, or if the licensee is unable to pay its debts, or in the interest of the security and reliability of the services provided by the licensee, or in the public interest.