Why electricity retailers' rates are better in the Open Electricity Market
Mr Albert Tang in his letter (Why are SP Group's rates higher than retailers'?; Jan 16) asked why electricity retailers are able to offer lower rates than the regulated tariff in the Open Electricity Market.
The regulated tariff, charged by SP Group and approved by the Energy Market Authority, reflects the long-term costs of producing and delivering electricity in Singapore, such as the costs of building and operating the power plants and maintaining the power grid.
On the other hand, the electricity rates offered by retailers typically reflect the current market conditions, level of competition and short-term costs of producing electricity.
Under current market conditions where electricity production capacity exceeds demand for electricity, we can expect market prices to be lower than the regulated tariff.
However, this may change over time based on market demand and supply.
Consumers should be aware that while the price plans offered by retailers are fixed for the duration of each contract, retailers, like all businesses, may adjust their prices and discounts over time.
Consumers who have switched to other retailers can also switch back to buying electricity at the regulated tariff from SP Group.
They should check with their retailers if there are any applicable charges when making this decision.
In the Open Electricity Market, consumers can also benefit from more choices and innovative offers, such as electricity generated from solar power, as well as value-added packages through bundled products and services.
Dorcas Tan (Miss)
Director
Market Development and Surveillance Department
Energy Market Authority
ST Forum, 23 Jan 2019
Mr Albert Tang in his letter (Why are SP Group's rates higher than retailers'?; Jan 16) asked why electricity retailers are able to offer lower rates than the regulated tariff in the Open Electricity Market.
The regulated tariff, charged by SP Group and approved by the Energy Market Authority, reflects the long-term costs of producing and delivering electricity in Singapore, such as the costs of building and operating the power plants and maintaining the power grid.
On the other hand, the electricity rates offered by retailers typically reflect the current market conditions, level of competition and short-term costs of producing electricity.
Under current market conditions where electricity production capacity exceeds demand for electricity, we can expect market prices to be lower than the regulated tariff.
However, this may change over time based on market demand and supply.
Consumers should be aware that while the price plans offered by retailers are fixed for the duration of each contract, retailers, like all businesses, may adjust their prices and discounts over time.
Consumers who have switched to other retailers can also switch back to buying electricity at the regulated tariff from SP Group.
They should check with their retailers if there are any applicable charges when making this decision.
In the Open Electricity Market, consumers can also benefit from more choices and innovative offers, such as electricity generated from solar power, as well as value-added packages through bundled products and services.
Dorcas Tan (Miss)
Director
Market Development and Surveillance Department
Energy Market Authority
ST Forum, 23 Jan 2019
Why are SP Group's rates higher than retailers'?
I appreciate the Energy Market Authority's (EMA) response (Open electricity market gives consumers choice; Jan 14) to Mr Hoe Lye Soon's concerns regarding the Open Electricity Market (OEM) (Keep buying of electricity simple; Jan 5).
I acknowledge that it is always good for consumers to have more choices.
However, I have a seemingly simple question that has yet to receive a satisfactory answer from the electricity retailers I have asked.
Given that electricity retailers are looking to make a profit, have spent a significant amount on marketing costs and are still able to offer consumers electricity rates that are a good 20 to 30 per cent lower than SP Group's, why doesn't SP Group just offer consumers these lower rates in the first place?
Many of the 13 or so retailers participating in the OEM do not generate their own power, instead claiming to buy in bulk from power plants to sell to consumers.
As the largest bulk buyer of electricity, SP Group should benefit the most from economies of scale, and be able to pass the savings on to consumers.
It is hard to understand the logic behind creating the OEM and getting so many retailers to compete for consumers, when SP Group is in a position to bypass this step to sell electricity directly to consumers at more competitive rates.
I doubt I am the only consumer puzzled by this, and hope that EMA can give a satisfactory explanation.
Albert Tang
ST Forum, 16 Jan 2019
I appreciate the Energy Market Authority's (EMA) response (Open electricity market gives consumers choice; Jan 14) to Mr Hoe Lye Soon's concerns regarding the Open Electricity Market (OEM) (Keep buying of electricity simple; Jan 5).
I acknowledge that it is always good for consumers to have more choices.
However, I have a seemingly simple question that has yet to receive a satisfactory answer from the electricity retailers I have asked.
Given that electricity retailers are looking to make a profit, have spent a significant amount on marketing costs and are still able to offer consumers electricity rates that are a good 20 to 30 per cent lower than SP Group's, why doesn't SP Group just offer consumers these lower rates in the first place?
Many of the 13 or so retailers participating in the OEM do not generate their own power, instead claiming to buy in bulk from power plants to sell to consumers.
As the largest bulk buyer of electricity, SP Group should benefit the most from economies of scale, and be able to pass the savings on to consumers.
It is hard to understand the logic behind creating the OEM and getting so many retailers to compete for consumers, when SP Group is in a position to bypass this step to sell electricity directly to consumers at more competitive rates.
I doubt I am the only consumer puzzled by this, and hope that EMA can give a satisfactory explanation.
Albert Tang
ST Forum, 16 Jan 2019
Open electricity market gives consumers choice
We thank Mr Hoe Lye Soon for his letter on the Open Electricity Market (OEM) (Keep buying of electricity simple; Jan 5).
The OEM aims to give consumers more choices when buying electricity.
Consumers who prefer to buy electricity from SP Group at the regulated tariff can continue to do so as it is not compulsory to switch and there is no deadline for switching.
Regardless of their choice, consumers will continue to enjoy the same reliable electricity supply.
There is strong competition in the Open Electricity Market.
Electricity retailers have to minimise costs and offer competitive price plans.
Consumers who have switched pay an electricity rate which is on average about 20 per cent lower than the regulated tariff.
Those who wish to switch can start by comparing the standard price plans offered by the electricity retailers using the Price Comparison Tool available at compare.openelectricitymarket.sg
When they are ready to sign up, they can do so online through the retailer's website.
The retailer will then work with SP Group to effect the switch.
Household consumers can also choose to use an advanced meter to monitor half-hourly electricity consumption data via a mobile application.
Retailers will be able to advise customers on this option.
The Energy Market Authority will continue to engage consumers to help them make informed electricity purchase decisions.
Dorcas Tan
Director
Market Development & Surveillance Department
Energy Market Authority
ST Forum, 14 Jan 2019
We thank Mr Hoe Lye Soon for his letter on the Open Electricity Market (OEM) (Keep buying of electricity simple; Jan 5).
The OEM aims to give consumers more choices when buying electricity.
Consumers who prefer to buy electricity from SP Group at the regulated tariff can continue to do so as it is not compulsory to switch and there is no deadline for switching.
Regardless of their choice, consumers will continue to enjoy the same reliable electricity supply.
There is strong competition in the Open Electricity Market.
Electricity retailers have to minimise costs and offer competitive price plans.
Consumers who have switched pay an electricity rate which is on average about 20 per cent lower than the regulated tariff.
Those who wish to switch can start by comparing the standard price plans offered by the electricity retailers using the Price Comparison Tool available at compare.openelectricitymarket.sg
When they are ready to sign up, they can do so online through the retailer's website.
The retailer will then work with SP Group to effect the switch.
Household consumers can also choose to use an advanced meter to monitor half-hourly electricity consumption data via a mobile application.
Retailers will be able to advise customers on this option.
The Energy Market Authority will continue to engage consumers to help them make informed electricity purchase decisions.
Dorcas Tan
Director
Market Development & Surveillance Department
Energy Market Authority
ST Forum, 14 Jan 2019
Keep buying of electricity simple
It is odd that only 30 per cent of eligible consumers have switched from the current incumbent SP Group to the electricity retailers (1 in 3 eligible consumers switches to electricity retailer; Dec 30, 2018).
The Energy Market Authority (EMA) expects this take-up rate to stay the same as the roll-out stretches across the island.
For a scheme that is touted to reduce consumers' electricity bills, this surely cannot be right; one expects the take-up rate to be more than 50 per cent as a minimum. This could mean consumers either are indifferent, or cannot understand or see the purpose of the scheme.
A pertinent question is: What value do the 13 electricity retailers bring to the table, especially as they do not produce electricity and are also not responsible for the reliability and performance of the electricity supply?
With 13 retailers, it would be logical to conclude that operating, administration and marketing costs would actually increase and the burden is going to fall on the consumers.
In a liberalised market, certainly large organisations including the larger estates will seek group discount rates, resulting in multi-tier rates with the smaller estates or individuals paying top-tier rates.
Let's keep the buying of electricity, a non-differentiated and essential product, simple.
Consumers want a simple system without having to spend much time trying to search for the "best rate".
In this Internet age, I reckon what consumers want is real-time monitoring of their electricity usage. Perhaps EMA could look into the replacement of the electricity meters that have remained the same for ages.
With real-time metering, we eliminate the need for a person to read the meter and, more importantly, the massive data collected (down to the individual households) will be a treasure trove for economic and other applications.
Hoe Lye Soon
ST Forum, 5 Jan 2019
It is odd that only 30 per cent of eligible consumers have switched from the current incumbent SP Group to the electricity retailers (1 in 3 eligible consumers switches to electricity retailer; Dec 30, 2018).
The Energy Market Authority (EMA) expects this take-up rate to stay the same as the roll-out stretches across the island.
For a scheme that is touted to reduce consumers' electricity bills, this surely cannot be right; one expects the take-up rate to be more than 50 per cent as a minimum. This could mean consumers either are indifferent, or cannot understand or see the purpose of the scheme.
A pertinent question is: What value do the 13 electricity retailers bring to the table, especially as they do not produce electricity and are also not responsible for the reliability and performance of the electricity supply?
With 13 retailers, it would be logical to conclude that operating, administration and marketing costs would actually increase and the burden is going to fall on the consumers.
In a liberalised market, certainly large organisations including the larger estates will seek group discount rates, resulting in multi-tier rates with the smaller estates or individuals paying top-tier rates.
Let's keep the buying of electricity, a non-differentiated and essential product, simple.
Consumers want a simple system without having to spend much time trying to search for the "best rate".
In this Internet age, I reckon what consumers want is real-time monitoring of their electricity usage. Perhaps EMA could look into the replacement of the electricity meters that have remained the same for ages.
With real-time metering, we eliminate the need for a person to read the meter and, more importantly, the massive data collected (down to the individual households) will be a treasure trove for economic and other applications.
Hoe Lye Soon
ST Forum, 5 Jan 2019
Open Electricity Market: All households, firms to get choice of power retailer from 1 November 2018