Wednesday, 27 September 2023

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Will the liberisation of the energy market really lead to a better deal for the consumers?

While more competition is always a good thing for the consumer, it remains to be seen how the liberalisation of the energy market in Singapore will yield the results that it is intended to.

Firstly, because the way the plan is being rolled out, different parts of Singapore will get different choices of energy suppliers which will in turn mean that some areas will get more choice than others. Why is it that some areas get more choice than others? How were the various zones chosen?

If the whole point of the liberalisation of the energy market is to provide greater choice and fairness for the customers, it seems strange that we are starting out with uneven choices for different parts of Singapore.

Secondly, it would appear that four participants in the pilot scheme in Jurong have pulled out for various reasons, including the reassessment of their business plans and focusing on developing certain products or platforms. These reasons seem vague although they might suggest that it was not lucrative enough for them. Would this be a problem that would also affect the rest of the energy suppliers as time goes on? Further, smaller retailers may not be able to compete with price and this could end up being just a big boys game. Could this lead to potential risks of industry price fixing?

Another point of concern is where the various energy companies get their power from. The companies may be different but will they be relying on the same power grid or will they have their own? If they are relying on the same power grid i.e. SP Group, this may not necessarily translate to a better service. Just recently, there was a blackout that affected a large area in Singapore. Although the problem was rectified fairly quickly, consumers must be made aware that the choice of different suppliers does not mean different power grid. In other words, if the power grid goes down, they would all be affected no matter which energy supplier they use. This should be made clear to Singaporeans to prevent any misunderstanding.

It is important to note that SP Power is wholly owned by Temasek Holdings. In other words, while the energy suppliers are diversified, the ultimate middle man is still a single entity that is seen as the private arm of the Singapore government. If SP Power decides to put up prices, to what extent will the various energy retailers be able to combat that?

It is also important to note that some of the 12 energy suppliers such as Keppel Electric Pte Ltd, Sembcorp Power Pte Ltd and SingNet Pte Ltd are all affiliated with Temasek Holdings. This would mean that the ultimate supplier and one quarter of the licensed suppliers are all Temasek linked. Is this a form of monopoly?

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