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SP Services should stop giving excuses, says Ravi Philemon.

Just the messenger? Then SP Services should petition EMA!

Ravi Philemon / Writer

"We have nothing to hide," says Mr. Quek Poh Huat Group Chief Executive Officer of Singapore Power, launching a spirited defense against public outrage against the 21.5 percent increase in electricity tariffs in September. (See here).

His key message was that blaming SP Services for high tariffs is akin to shooting the messenger. Hi defense is that SP Services does not generate electricity; it merely transports power from the generation companies (gencos) to end-users, selling to households without any price mark-ups.

If this defense was indeed true, SP Services should petition the Energy Market Authority (EMA) to prevent the three gencos - PowerSeraya, Senoko Power and Tuas Power - who together account for 80 per cent of Singapore's power-generating capacity, from charging customers excessive rates especially when it is impossible to import cheaper electricity from competing gencos into the region. With the three gencos controlling 80 percent or more of the supply in Singapore, they have the ability to corner the market and dictate excessive, unjust or unreasonable prices to the power transporter, SP Services and its customers.

SP Services should petition EMA to prevent gencos from charging excessive prices to energy transport companies and their customers when the market is not workably competitive.

The SP Services should petition EMA to:

-  Order generation companies to refund to customers all overcharges to date.
-  Revoke the authority of generation companies to charge market-based rates when energy imports from outside sources are not available.
-  Limit the future prices of generation companies during congestion periods to actual production costs.
-  Require generation companies to divest of some generating units if the companies want to retain the ability to charge market-based rates in the future.
-  Require public disclosure of price reductions imposed by the ISO when it finds generation companies exercising market power (what prices were reduced, when and why).
-  Limit the ability of the generation companies companies to impose excessive limits on unit operations.

If SP Services believes that gencos have an obligation to be fair to consumers and that consumers must be protected as the new energy market evolves, this is the right course of action to take. SP Services definitely has an obligation to its customers to monitor the market and bring to the attention of regulators market inefficiencies and imperfections; especially as Singapore moves from a fully regulated energy market to a competitive market for there will be obstacles that regulators need to address so the market will benefit all participants.

Read also: Tiered electricity tariff will benefit needy by NCMP Sylvia Lim (Straits Times Forum)

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