LIBERALISATION OF ELECTRICITY MARKET (Benefits to households)

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LIBERALISATION OF ELECTRICITY MARKET:

(Benefits to households): 8.

Mdm Halimah Yacob asked the Minister for Trade and Industry whether households, in view of the Energy Market Authority's plans to open up the electricity market so that all consumers can choose which retailer to buy electricity from, will benefit in terms of lower costs and greater efficiency.

The Minister of State for Trade and Industry (Dr Vivian Balakrishnan) (for the Minister for Trade and Industry): Mr Speaker, Sir, liberalisation of the retail market is one part of an on-going process to open up the electricity market to competition. This has already yielded significant benefits to all consumers, including households. Had fuel price remained unchanged, the average electricity price would have come down by 9.5% since December 2001. In the event, increased competition has helped to offset the increase in oil prices, which is today 10.3% higher than it was in December 2001.

The electricity retail market is progressively being liberalised to facilitate competition. About 5,000 large industrial and commercial consumers with a monthly consumption of above 20,000 kWh can already choose which retailer to buy electricity from. By the second half of this year, a total of about 10,000 large

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consumers, who would together represent about 75% of total electricity demand, will be open to retail competition.

For the remaining 1.1 million small consumers, mainly households, the Energy Market Authority is now working on the details for opening the market to retail competition. The experience in other countries is that the extent to which consumers can actually benefit from lower costs and higher efficiency depends on how much cost-savings retailers can gain, and if there are other ways of creating value for customers.

For example, to achieve economies of scale, smaller consumers such as households may need to aggregate to form larger buying groups to reap savings. Some small consumers have also benefited because of the differentiated products and services that are offered by retailers. EMA is studying the experience of other countries, and will design our market structure to achieve the most optimal results.

Ms Indranee Rajah (Tanjong Pagar): May I ask the Minister of State, Sir, in that connection, whilst we are studying the experience of other countries, is there a not insignificant number of our population which are either illiterate or speak only dialect, Malay or Tamil who may not have the same degree of access to information as some of the others may do? So, when it comes to implementation of the system, particularly with respect to household consumers, may I ask if the Ministry will look into this issue to see how information can be given to such people, and how they can be helped, so that they can benefit from this policy of opening up the market?

Dr Vivian Balakrishnan: Mr Speaker, Sir, the Member brings up a valid point and we will certainly ensure that adequate

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information is provided, so that people can make informed choices.