Review to Tighten Licensing Conditions for Electricity Retailers to Better Protect Consumers

Mr Speaker, in October 2022, the Ministry of Trade and Industry (MTI) announced that the Energy Market Authority (EMA) would be introducing guardrails to strengthen the electricity market and prepare Singapore for the energy transition. These guardrails include enhancements to the regulatory requirements on electricity retailers to strengthen consumer protection and the retailers' ability to withstand market volatility.

On 1 February 2023, EMA launched a public consultation on the proposed enhancements to the regulatory framework for electricity retailers. The consultation will close on 3 March 2023. We will study the feedback carefully thereafter and fine-tune the enhancements before implementing them.

The proposed enhancements will give users greater assurance that their retailers will be able to fulfill their contracts. MTI and EMA have carefully calibrated the proposed enhancements to minimise the cost impact of complying with the new regulations. These enhancements are part of a broader set of moves to bring about a stronger and more secure power system, and help us to mitigate better the impact of global volatility on domestic consumers.

Thank you, Mr Speaker. I thank the Minister for his reply. What are some of the benefits to consumers once the review is completed and the changes implemented? For instance, will consumers continue to have choice in terms of retailers?

Mr Speaker, I thank the Member for his supplementary question. Moving forward, EMA intends to require all retailers to hedge at least 80% of their retail contract quantity on a rolling 24-month forward basis. Retailers would have to provide a performance bond, to cover their projected residual unhedged quantities. This increased hedging requirements are intended to increase the resilience of retailers during periods of market volatility.

To the Member's point about the retailers, it is really a market condition. But there are multiple ways that retailers can meet EMA's increased hedging requirements. Besides the electricity futures market, retailers can also enter into contract for different Contracts-for-Difference, which suppliers with physical generation assets such as generation companies, waste to energy plants or solar providers.

The enhancements are needed as I mentioned in my reply earlier on, to give our users more assurance that their retailers will operate prudently and that their contracts will be on it. MTI and EMA have carefully calibrated enhancements to ensure that any cost impact is reasonable.

The whole purpose of this public consultation exercise, with both the public and industry on these enhancements – the proposed enhancements to the regulatory framework – is to garner the feedback and we will consider what other suggestions from this consultation very carefully and fine-tune these proposed enhancements as needed. I hope that gives the reassurance to the hon Member of Parliament.