ELECTRICITY TARIFF

ELECTRICITY TARIFF

1.

Mr Leong Horn Kee asked the Minister for Trade and Industry if he will give (a) an update on the status of the electricity tariff liberalisation programme currently undertaken by the Energy Management Authority (EMA); (b) details on the sectors which have been made contestable; and (c) the future plans on the remaining sectors to be allowed to be become contestable, such as the domestic electricity sector.

BG George Yong-Boon Yeo: Retail competition, or electricity tariff liberalisation, takes place when a consumer can choose to buy electricity from any retailer who can provide the best deal. These customers are known as contestable customers.

Contestability has been implemented in phases to ensure a smooth transition.

About 250 consumers with electricity demand of 2 MW and above became contestable in July 2001. These consumers are the very large industrial and commercial consumers who together represent 40% of total electricity demand.

Another 5,000 consumers with an average monthly electricity consumption of above 20,000 kWh became contestable over the period June 2003 to September 2003. These are large industrial and commercial consumers, many of whom are high-tension consumers. These 5,000 accounts together represent 30% of total electricity demand.

The remaining 5,000 large industrial and commercial consumers with an average monthly consumption of 10,000 kWh and above will be released into contestability from December 2003 to mid-2004. These 5,000 accounts together represent 5% of total electricity demand.

By mid-2004, 75% of total electricity sales in Singapore will be opened to retail competition.

The remaining 1.1 million domestic and small non-domestic consumers have an average monthly consumption of less than 10,000 kWh, i.e. a bill size of less than $1,600 per month. Together, these 1.1 million accounts make up 25% of total electricity sales.

EMA is studying how best to introduce retail competition for these accounts. EMA targets to complete its study by early next year.

Even without retail competition, the benefits of liberalisation and competition at the wholesale level have led to a reduction in electricity prices. Tariffs would have fallen 9.5% as a direct result of liberalisation, if oil prices had remained constant. This has already been passed on to all consumers, contestable as well as non-contestable.

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