Debated in Parliament on 11 Mar 2022.
Mr Yip Hon Weng asked the Minister for Trade and Industry (a) whether EMA will consider extending the Temporary Electricity Contracting Support Scheme (TRECS) beyond May 2022; (b) if so, whether EMA will (i) require all electricity retailers to offer TRECS to consumers and (ii) consider providing guidelines to electricity retailers for TRECS to avoid unfair contractual terms and encourage greater take-up rates by consumers.
Mr Speaker, last month, I shared with this House that the Energy Market Authority (EMA) has extended the Temporary Electricity Contracting Support Scheme (TRECS) from March till May 2022. Thus far, participating generation companies and retailers have been providing sufficient TRECS and retail contracts with significant fixed price components to meet demand, on a voluntary basis.
To ensure that electricity retailers do not impose unfair contractual terms on consumers under TRECS, EMA has worked directly with retailers to ensure that contractual terms such as prices and security deposit requirements are reasonably set. All electricity retailers must comply with the Code of Conduct for Retail Electricity Licensees, called the Code. EMA will not hesitate to investigate and take action against any non-compliance with the Code.
TRECS are one-month contracts. For consumers who want greater certainty, we are also working with generation companies and electricity retailers to offer longer-term, fixed price contracts to consumers who wish to have more price stability. For example, retailers such as Keppel Electric and Sembcorp Power are currently offering longer-term electricity contracts ranging from six-months to three years. Eligible consumers without a retail plan may wish to consider such contracts for greater price certainty.
I would like to assure this House that we are monitoring the energy situation carefully, and are prepared to put in place further support measures, including extending TRECS, should there be a need to.
Mr Yip Hon Weng.
Thank you, Mr Speaker. I thank the Minister for his reply. I would like to ask the Ministry to clarify whether there is a limit to the amount that generating companies (gencos) can draw on EMA's standby fuel facilities for TRECS. Two, are gencos entitled to draw on EMA standby fuel facilities if they are not participating in TRECS?
I thank Mr Yip for his supplementary question. There is no limit to the amount that can be drawn down for TRECS. If their own gas supplies are disrupted, gencos can also draw on the Standby LNG Facility (SLF) and they have been doing so.
Mr Gerald Giam.
Sir, one business in my constituency recently sought my help and they informed me that they were unable to sign up for TRECS contracts in March, despite applying on 15 February, which it the day that the contracting window opened. They told me that it was fully subscribed that very day. Can I confirm with the Minister, was TRECS fully subscribed for the month of Februrary and if so, how many businesses had to be turned away? Are there plans to increase capacity for TRECS in the months of April and May, given the over-subscription in the month of March?
Lastly, taking into account the current global situation and over-subscribed TRECS, what measures has EMA planned to enhance Singapore's energy security and stabilise Singapore's wholesale electricity market?
I thank Mr Giam for his three supplementary questions. First, if he could get the resident or perhaps Mr Giam himself can write to me, I would be happy to investigate further. For his resident who could not get access to the contract, as far as TRECS is concerned, I think there is a bit of a mismatch.
Moving forward, we have monitored it on a very tight basis. Not only do we ensure that we have sufficient capacity as far as TRECS is concerned for the months of March, April and May, EMA has also been negotiating with other gencos to provide for fixed price contracts, on a longer-term basis, between three month and three years, as I shared in my earlier reply to Mr Yip Hon Weng. One of them is Keppel Electric and the other one is SembCorp Power.
Moving forward, in terms of ensuring our energy supplies and energy security, the fact is that there are further plans that are afoot. At this point in time, I am not ready to share these plans as yet. In terms of looking at our standby facilities, in terms of negotiations with imports and so on, our entire team is on it.
Mr Yip Hon Weng.
Mr Speaker, I just have a very short supplementary question. Would the Ministry consider making participation in TRECS mandatory for all gencos?
I thank Mr Yip for his suggestion. As the name represents, it is a temporary situation; it is a temporary retail electricity contract scheme. We have made it voluntary because the nature of the generation of electrons is that if you require them to generate the electrons, if there is excess electrons, it gets wasted. Pairing is quite important. You have on the one hand, companies who want to have some form of stability. But there are also concerns about the high prices. TRECS is a short-term measure. What we need is a further, longer-term measure, which EMA has worked on pari passu, in terms of supporting.
Hence, we are quite comforted by the fact that two other gencos, gen retailers have stepped forth to offer longer-term fixed price contracts, ranging from six months to three years, to offer some form of price certainty.
The challenge is that today, TRECS offer the flexibility of a one-month contract, which allows companies to hedge for that one month. Because the prices are quite high today, if they lock themselves for a long term, and if the price should ease off after that, then, it would be very difficult for them to justify that increased cost, moving forward.
Given the volatility that the current situation, the whole world is in today, with a lot of fluctuations happening, I think this is a more nuanced approach. It allows responsiveness and the ability to nimbly work in terms of managing their costs, at least on a month-to-month basis, should the stability return to the market.
Order. End of Question Time.
[Pursuant to Standing Order No 22(3), written answers to questions not reached by the end of Question Time are reproduced in the Appendix, unless Members had asked for questions standing in their names to be postponed to a later Sitting day or withdrawn.]
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