30 June 2015
More transparent energy pricing expected with market liberalisation
SINGAPORE: Businesses can expect energy pricing to become more transparent from next month.
Starting Jul 1, lower energy consumers, such as small companies, will be able to choose their electricity suppliers. The Association of Small and Medium Enterprises said this will give smaller firms more choices, helping them cut costs.
The Energy Market Authority will slash by half the power-consumption threshold for consumers that qualify to buy electricity direct from retailers. Previously, businesses which consumed, on average, between 2,000 and 4,000-kilowatt-hours of electricity per month, had to buy power from SP Services at the regulated tariff.
With market liberalisation, they will be able to choose from a list of more than 10 power retailers, and this should lead to more competitive pricing. While this means more choices, it also means that businesses have to do their homework diligently, to figure out what is best for their operations.
The 2,000-kilowatt-hour threshold means small cafes, restaurants and offices can be among those to benefit from the spread of options.
Energy retailers compete by offering what they think is the best deal and service available for a particular package. But how much will businesses really save from the liberalisation?
Said Ms Geraldine Tan, general manager for retail at PacificLight Energy: "The quantum of the savings really differs. We can't put a number to say that … by taking up this package, it is going to give you ‘X’ savings. So the details is when we talk to the individual consumer."
An option for consumers is to lock in energy pricing at a certain amount, to protect themselves from market fluctuations. Ms Tan explained: "Consumers can choose to buy their electricity or hedge at the rate which they think that it is right time for them to enter the market to secure their electricity consumption at a fixed price.
“Or if they choose not to make a decision on a certain duration or period, we can also give them the flexibility to offer them a different type of price plans that is pegged to regulated tariff."
The Association of Small and Medium Enterprises expects energy retailers to draw up promotional plans to attract consumers. Its president, Mr Kurt Wee, noted: "In the long scheme of things, what it does is it ensures that the users are getting competitive rates, market benchmark, fair rates, long-term fair rates that are offered by multi-players in the market."
The Association said businesses should also get better service and support from energy retailers, who will want to establish loyalty among customers.
CR: Channel NewsAsia