Compensation when Electricity Retailer Exits Market

Mr Leon Perera asked the Minister for Trade and Industry (a) whether EMA has the responsibility to ensure that electricity retailers uphold the Consumer Protection (Fair Trading) Act 2003 when they exit the market; (b) if so, whether EMA sets a standard for compensation when an electricity retailer exits the market; and (c) whether a transparent method to determine a fair standard can be made known.

The Second Minister for Trade and Industry (Dr Tan See Leng) (for the Minister for Trade and Industry): Mr Speaker, the Consumer Protection (Fair Trading) Act 2003 (CPFTA) protects consumers against unfair practices by suppliers, such as misrepresentations or false claims. These include services provided by electricity retailers.

Electricity retailers are also licensed under the Electricity Act and regulated under the Code of Conduct for Retail Electricity Licensees, called the Code. The Code requires retailers to comply with fair contracting practices. For instance, retailers must provide a consumer advisory and fact sheet to summarise the key terms of the retail plans, for consumers to acknowledge such information before signing contracts with the retailers.

The Energy Market Authority (EMA) has implemented some safeguards in retailer exits. Exiting retailers are required to refund all security deposits collected from household consumers after offsetting outstanding charges. Exiting retailers must also approach other retailers to seek their interest and agreement to accept the novation of the contracts on the same terms and conditions, before the consumer can be transferred to SP Group under the default supply arrangement. Consumers are also free to switch to other retailers of their choice.

Between October and December 2021, six electricity retailers exited the market. While the CPFTA and the Code do not require exiting retailers to compensate their consumers, three exiting retailers – Best Electricity, Ohm Energy and UGS Energy – have committed to provide ex-gratia payments or private settlements to ease their consumers' transition.

EMA will review the current regulatory regime and will seek to strengthen the licensing and regulatory requirements for electricity retailers to better protect consumer interests. Consumers who wish to seek recourse from their electricity retailers can approach the Consumers Association of Singapore (CASE), Singapore Mediation Centre or Small Claims Tribunal (SCT), for advice and assistance.

Mr Speaker: Mr Perera. Can you please keep it short? Thank you.

Mr Leon Perera (Aljunied): Thank you, Mr Speaker, Sir. I thank the Minister for his comprehensive reply. I have just one supplementary question. So, it does appear that some retailers are providing ex-gratia compensation upon appeal, and when people write in and request a compensation. Going forward, will the Government consider "template-tising" that and setting a standard for what sort of compensation should be paid so that people who write appeals do not get the benefits that other people who do not write appeals get?

Dr Tan See Leng: I thank the hon Member Mr Leon Perera for his supplementary question. Indeed, that is one of the considerations that we are also considering. As I have shared earlier on, EMA is conducting a review in terms of how we can further strengthen the framework and also to ensure that in a very unprecedented crisis, such as this, what other measures will we be able to leverage on to support our general population and also many of the SMEs at large.

11.02 am

Mr Speaker: Order. End of Question Time.

[ Pursuant to Standing Order No 22(3), Written Answers to Question Nos 9 and 12-13 on the Order Paper are reproduced in the Appendix. The remaining Questions have been postponed to a later Sitting of Parliament or withdrawn. ]