Oral reply to PQs on Temporary Electricity Contracting Support Scheme (TRECS)

Questions

Mr Edward Chia: To ask the Minister for Trade and Industry (a) to date, what is the take-up rate of the Temporary Electricity Contracting Support Scheme (TRECS); (b) what is the number of companies not supported by TRECS; (c) what is the cost delta impact on these companies and the reasons for not being supported; and (d) whether the Ministry intends for TRECS to continue for an extended period of time.

Ms Sylvia Lim: To ask the Minister for Trade and Industry (a) what is the Ministry's assessment of the effect of the exit of various electricity retailers in 2021 on the electricity bills of small and medium enterprises (SMEs); and (b) how is the Government monitoring or managing the capacity of the remaining retailers so as to facilitate SMEs having options to manage their electricity costs.

Ms Jessica Tan: To ask the Minister for Trade and Industry in light of five electricity retailers ceasing operations last year and many small and medium businesses (SMEs) having to shift back to SP Services’ wholesale electricity plan, what support can be extended to these SMEs to provide more certainty to manage their business costs against very high increases in their monthly electricity charges, particularly those with average monthly electricity consumption of 4,000 kWh and above.

Mr Gerald Giam: To ask the Minister for Trade and Industry (a) whether he can provide an update on the Temporary Electricity Support Scheme (TRECS) since it was introduced in December 2021; (b) whether the TRECS will be extended beyond February 2022; and (c) whether EMA will consider working with electricity retailers to provide a 12-month fixed electricity plan for smaller business consumers, specifically SMEs with a monthly consumption between 4,000 and 20,000 kWh.

Ms He Ting Ru: To ask the Minister for Trade and Industry (a) what support is available to SMEs and (b) what are the options available to affected businesses, when their utilities costs have increased by large factors due to the insolvency of their previous utilities retailers.

Mr Saktiandi Supaat: To ask the Minister for Trade and Industry (a) what is the amount of unsatisfied demand under the Temporary Electricity Contracting Support Scheme (TRECS); (b) whether EMA is considering support schemes with a longer time horizon for SMEs who have been hit by the exit of their electricity retailers; and (c) what other measures are being considered to help SMEs secure fixed electricity prices in the retail market, especially for those being involuntarily subjected to Singapore Power's wholesale electricity price plan.

Oral Answer (to be attributed to the Second Minister for Trade and Industry Dr Tan See Leng)

1. Mr Speaker, may I have your permission to answer PQs 41 to 45, as well as the PQ filed by Mr Saktiandi Supaat that has been scheduled for a subsequent sitting?

Background

2. Mr Speaker, the world has been facing a global energy crunch since September last year. The price of spot liquefied natural gas (LNG) rose significantly and remains elevated at more than 3 times the levels at the start of 2021. While our piped natural gas supply typically helps to moderate the impact from higher LNG prices, there was a series of disruptions and planned depletions to our PNG supply since the second half of 2021. This confluence of factors has caused increased volatility in wholesale electricity prices. Since October 2021, the Energy Market Authority (EMA) has implemented a set of measures to enhance Singapore’s energy security and stabilise the Singapore Wholesale Electricity Market (SWEM) prices.

3. Nevertheless, some market participants were adversely affected by the volatility. Between October and December 2021, 6 electricity retailers exited the market and another 2 retailers prematurely terminated some of their customers’ contracts. As a result, about ~9% of all electricity consumer accounts were affected.

4. All affected households, and businesses with an average monthly consumption of less than 4MWh can switch to SP’s regulated tariff at any time. Some businesses consuming 4MWh or more managed to secure plans with other retailers. There remain around 11,000 business consumer accounts – accounting for about 1% of consumers – which have to buy electricity directly from the SWEM and are thus, exposed to more volatile electricity prices.

Update on Temporary Electricity Contracting Support Scheme (TRECS)

5. To help these businesses, EMA worked with the generation companies (gencos) to offer monthly fixed price plans under the Temporary Electricity Contracting Support Scheme (TRECS) in January 2022. The TRECS plans were fully subscribed for January.

6. For the month of February, the initial offering of TRECS was also fully subscribed. In response to requests for more such contracts, EMA worked with gencos and electricity retailers to offer ~645MW of TRECS and other plans with significant fixed price components. At least 200MW of the contracts are still available. We are extending TRECS for March, April and May. We encourage all consumers without a retail plan to consider taking up these contracts for greater certainty.

Electricity Prices and Assistance Measures

7. Mr Speaker, let me now turn to the issue of electricity prices. Singapore imports a vast majority of our energy and cannot be fully insulated from developments in the global energy market. High fuel prices feed into our electricity bills, to reflect the higher costs of electricity production.

8. As I had mentioned during the Committee of Supply debates last year, we had been enjoying artificially low electricity prices for several years, due to an over-investment in capacity and fuel by the generation companies. This was below the cost of generating electricity and thus, it was not sustainable. An electricity price correction was therefore unavoidable, and the current global energy crunch has precipitated and exacerbated this correction.

9. Members of this House have asked what help is available for the affected businesses. Household and small consumers which need help with their electricity bills can apply to SP Services for instalment payment plans. Businesses which need financing support can also make use of ESG’s programmes such as the Temporary Bridging Loan, and Enterprise Financing Scheme SME Working Capital Loan.

10. The 11,000 or so business accounts without a long-term retail contract bear the brunt of electricity crunch. To help them weather the storm, EMA has worked with gencos and electricity retailers to reduce the volatility and lower the cost of buying electricity through TRECS, additional monthly contracts offered by gencos, and on the wholesale market for businesses, as I mentioned earlier. For example, Sembcorp Power Pte Ltd is offering one-month fixed price plans at preferred rates to consumers with average monthly consumption between 4 to 8 MWh.

11. EMA will also continue to monitor closely market developments, including heightened geopolitical tensions and their potential impact on global energy prices, and put in place the necessary measures to secure our energy supply, enhance stability and ensure orderly functioning of the market.

Conclusion

12. Mr Speaker, Singapore has an open and competitive electricity market where prices rise and fall depending on demand and supply conditions and developments in the global energy market. Over the last twenty years, our energy market has served us well. Our electricity supply is one of the most reliable and price competitive amongst major developed cities.

13. Our energy market is now being tested by unprecedented shocks and volatility in the global energy markets. Nevertheless, we are committed to ensuring that Singapore’s energy supply remains secure and reliable, and to supporting our vulnerable customers through this period. My only exhortation and urging is for all consumers to use energy prudently and adopt energy conservation as a way of life. We will also learn from this episode to see how we can strengthen and fortify our energy resilience, and our electricity market. I am confident that together, we will emerge from this stronger.

14. Thank you.