Singapore has now joined a convoy of other countries with a liberalised electricity market, such as the United Kingdom, Japan, United States, and Italy.
Bright with competition from a current list of 13 retailers, the Open Electricity Market (OEM) is an initiative rolled out by the Energy Market Authority that is set to benefit residential consumers and companies across Singapore.
As of now, the OEM is only opened to selected geographical areas but it will be rolled out to the whole nation by May 1, 2019.
What does this extension mean?
Homeowners and businesses will finally have the flexibility to choose their preferred electricity provider, from a current list of 13 providers. They may either choose to remain with SP Group or switch to any retailer of their choice that suits their consumption requirements (e.g. electricity usage patterns, pricing options). As a corollary, refer to the liberalisation of Singapore’s telecommunication industry in 2000 where new players such as StarHub and M1 broke Singtel’s monopoly.
These 13 electricity retailers in the market provide a variety of price plans which adheres to the needs of different type of consumers.
How is this beneficial for consumers?
After the United Kingdom opened up its energy market to competition in 1999, it saw a significant reduction in electricity prices owing to market competition and efficiency gains.
Zooming down locally, the Jurong soft launch in April 2018 and initial rollouts to two zones in Singapore saw residents who switched enjoying between 20% and 30% off their regular electricity bills.
Electricity plans offered by providers are retailed at prices that are much lower than the regulated tariffs. Thus, the electricity expenses of various households and businesses can see an effective reduction if a switch is made. In addition to this, retailers also provide certain incentives such as discounts, freebies and shopping vouchers to attract more customers. This contributes greatly to immediate and long-term cost saving for Singaporeans.
Aside from attractive price plans, electricity retailers have decided to innovate their product offers. Certain retailers have forged partnerships with third-parties including banks and telecommunication companies to provide a seamless integrated service and value-add their current offer. One key example is Geneco and Singtel, in which Singtel now resells electricity plans through Singtel Power. Such efforts extend greater flexibility and choice to households in Singapore.
What prompted EMA to take this decision?
By the end of January 2019, 40% of Jurong residents had already switched to another electricity provider. An EMA-conducted survey of Jurong residents found out that they generally felt positive about the OEM.
To note, 90% of these respondents know about the OEM and their option to purchase electricity from alternative providers, and 80% of those surveyed said that they appreciated the benefits of it. Such a positive response became a factor which encouraged the initiative to be pushed to the whole of Singapore
In conclusion, residential consumers and businesses in Singapore now have the ability choose who they want to buy their electricity from. This is due to the liberalisation of the electricity market. With so many benefits that comes with the OEM, it is important for consumers to study all their options (i.e. price plans and contracts of the 13 electricity retailers) before deciding on one to switch to.
Be on your way to save on your monthly electricity bill by educating yourself more about Singapore’s energy market.