Reducing Electricity Grid's Exposure to Global Natural Gas Price Shocks

Mr Lee Hong Chuang asked the Minister for Trade and Industry (Energy and Industry) (a) whether the Ministry can provide an outline on measures taken to reduce the electricity grid's exposure to global natural gas price shocks; (b) whether it can ensure that Open Electricity Market retailers honour fixed-price plans during periods of fuel price surges; and (c) whether it can strengthen safeguards against retailer exits from the market resulting in consumers reverting to higher regulated tariffs.

Most of our electricity is generated from imported natural gas. While we cannot insulate ourselves from global energy prices, we have taken measures to mitigate our risks and exposure.

First, we will continue to diversify our gas portfolio. We currently import natural gas from diversified sources around the world, including piped gas from the region. In 2025, the Government established Singapore GasCo to centralise gas procurement for the power sector, to further enhance the reliability and security of our gas supplies. During the crisis triggered by the conflict in the Middle East, GasCo has stepped up to procure natural gas to replace disrupted gas shipments from the Strait of Hormuz and contribute to Singapore's gas resilience. Generation companies are required to provide the Energy Market Authority (EMA) with their expected gas demand and projected generation capacity. This enables EMA and GasCo to better assess and secure the power sector's gas needs.

Second, we will introduce new sources into our energy mix to gradually reduce our exposure to natural gas. In the near term, we will maximise the deployment of domestic solar, while also seeking to import electricity from the region.

Third, EMA requires electricity retailers to meet financial and risk management requirements, so that they can better withstand periods of market volatility and continue serving consumers. These requirements were enhanced in 2023 to require all retailers, including independent retailers, to hedge at least 80% of their contracted retail position on a 24-month forward basis and provide performance bonds for unhedged retail quantities. EMA has also introduced a temporary price cap in the wholesale electricity market, which acts as a circuit breaker during sustained periods of extreme price volatility. This cap helps retailers manage the price risks arising from gas market fluctuations.

Under fixed-price plans, retailers cannot unilaterally change the electricity rate unless permitted under specific contract provisions, such as force majeure clauses. A surge in fuel price would not automatically constitute a force majeure event. Retailers are also prohibited from unilaterally terminating contracts without the consumer's consent, unless the consumer has breached the contract.

If a contract is terminated prematurely because of a retailer's exit, the affected consumers can continue to buy electricity from another retailer or SP Services without any interruption to their electricity supply. EMA oversees this process to ensure an orderly transition.

We consistently review our frameworks to maintain a resilient and competitive electricity market while protecting consumers.