For almost two decades now, Singapore’s Energy Market Authority (EMA) has been introducing market measures into the electricity market to discourage any sort of monopoly and to encourage retailers to provide innovative offers that will greatly benefit consumers.
The Structure of the Electricity Market
Basically, the electricity market in Singapore comprises of wholesalers and retailers. Wholesalers are a group of power generation companies, while retailers are a group of companies that buys electricity from wholesalers in bulk.
Wholesalers can only sell electricity to a retailer in the wholesale market after bidding it off. This normally occurs every 30 minutes. If there are numerous changes in the demand and supply of electricity, prices are most likely to change accordingly within that period. When these power generation companies are done bidding their prices, retailers conduct business with these companies that offer their excess electricity supply. This makes the structure of the electricity market very flexible for wholesalers and retailers.
After buying from generation companies, retailers will sell the electricity to prospective consumers. There are two general classes of consumers: contestable consumers and non-contestable consumers.
Contestable consumers are at the top of the consumer chain in the electricity market because they have the liberty to choose which retailer to buy electricity from. These consumers can buy from any retailer of their choosing, or from the wholesalers themselves. This is great as they can choose an electricity plan that suits their consumption habits at home, or for businesses, at work.
While these preferences have made contestable consumers save more and get more value for what they are paying for, non-contestable ones don’t have that privilege. Non-contestable consumers are restricted to buying electricity from only SP services at regulated tariffs.
The Open Electricity Market
A measure to increase competition between retailers and wholesalers in the electricity market was the recent launch of the Open Electricity Market (OEM). The EMA introduced this market framework which has consequently bridged the gap between contestable and non-contestable consumers.
Rolled out islandwide phase-by-phase since November 1, 2018, the OEM deems every consumer eligible to choose which retailer they would like to buy electricity from. It also ensures an energy supply that is secure and reliable for Singaporeans.
Implications of the Open Electricity Market
In the past, electricity consumers were only eligible to choose who to buy electricity from after meeting certain conditions. For example, for business consumers, they had to consume at least 2000kWh of electricity monthly.
The Open Electricity Market ensures that no conditions will be used to deprive consumers of the right to choose who they want to buy electricity from. As long as one resides in Singapore, the OEM qualifies Singaporeans to freely choose who they want to buy electricity from.
With the OEM, your right to choose a suitable electricity retailer is only a matter of when and not if.
Click the following link if you would like to know more about an electricity retailer in the Open Electricity Market.