POWER FAILURES

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POWER FAILURES: 1.

Mr Leong Horn Kee asked the Minister for Trade and Industry what are (i) the reasons for the recent spate of power failures in Singapore and (ii) the measures being taken to prevent their recurrence.

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2.

Mr Tan Soo Khoon asked the Minister for Trade and Industry (a) what were the causes of the power failure on 29th June 2004; and (b) what steps can be taken to prevent a recurrence.

3.

Dr Warren Lee asked the Minister for Trade and Industry (a) what is the cause of the latest widespread electrical power failure in Singapore on the night of 29th June 2004; (b) whether such a situation can be prevented by diversification of fuel sources for our power stations or by having a wider range of generating plants so that the loss of any one fuel source or plant is less likely to result in electrical power failure to large parts of Singapore; (c) how often do construction accidents cause damage to major electrical cables in Singapore; and (d) whether enough measures are taken to reduce the risk of such an occurrence causing a widespread power failure.

4.

Dr Amy Khor Lean Suan asked the Minister for Trade and Industry (a) if a thorough investigation has been or will be undertaken to determine the causes for the three power outages that have occurred and which have been linked to disruption in gas supply from Indonesia; (b) what are the causes that have been identified for these power outages; (c) what steps have been and will be taken to minimise the occurrence of such power outages; and (d) what assurance he can give to the public that adequate measures have been taken to ensure that risks of sabotage of our gas and utility supply by terrorists are contained.

5.

Mr Low Thia Khiang asked the Minister for Trade and Industry what has been the extent of damage to Singapore's international reputation due to the recent power failures.

The Minister of State for Trade and Industry (Dr Vivian Balakrishnan) (for the Minister for Trade and Industry): Mr Deputy Speaker, Sir, with your

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permission, I will take Question Nos. 1, 2, 3, 4, and 5 together.

Mr Deputy Speaker: Yes, please proceed.

Dr Vivian Balakrishnan: Many MPs have filed questions on the recent power failures. The power failure on 29th June, in particular, caused great inconvenience to many Singaporeans and harmed our international reputation. The Economic Development Board (EDB) has reported serious negative comments from our existing and potential investors. We take a very serious view of such power failures, and will do everything possible to minimise the possibility of their recurrence.

Mr Deputy Speaker, power failures can occur because of two major factors: first, due to a disruption of the generating facilities; and second, due to a disruption at the transmission or distribution grid level. Let me deal with each of these two scenarios in turn.

The power failure on 29th June 2004 was caused by a disruption in the gas supply from the Natuna gas pipeline. This led to a sudden loss of about 30% of online generation capacity and a blackout that lasted up to one hour and 50 minutes. 300,000 customer accounts were affected. The supply disruption was traced to a defective pressure regulating valve in the onshore gas receiving facility (or ORF) operated by ConocoPhillips at Jurong Island. The valve malfunctioned because the solenoid, which is an electrical device that controls its movements, was water-logged and short circuited.

The pressure regulating valve first malfunctioned at 9.56 pm that night, and this was followed eight minutes later by a total closure of the emergency shutdown valve at 10.04 pm. The generation companies were alerted at their premises that

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the gas pressure at the ORF was dropping. When the emergency shutdown valve closes, the gas plants are supposed to "hotswitch" to their backup fuel (in this case, diesel), without affecting the continuity of electricity supply. Unfortunately, on that night, only one of the six gas plants in operation successfully made that "hotswitch". Two gas plants failed because of a problem with their diesel filter. And the other three ran out of gas before completing the "hotswitch" process. This resulted in the widespread power blackout that occurred at about 10.10 pm that night.

Let me just go through some of the findings and the immediate follow-up actions that the Energy Market Authority (EMA) has been engaged in since. As the emergency shutdown valve was not initially triggered, it was not immediately obvious at that point in time that "hotswitching" should have been commenced straightaway since, in such circumstances, some mild pressure fluctuations are part and parcel of a normal system. However, the unanticipated abnormal behaviour of the valve system at the ORF misled the operators that night. In retrospect, we now know that critical time was lost arising from this. EMA has instructed the generation companies to change their standard operating procedures so that they "hotswitch" earlier in the event of any pressure drop. The generation companies are also exploring ways to shorten the "hotswitching" process further. In addition, they have also stepped up maintenance of the diesel pump system, and will do "hotswitch" drills more frequently. I want to emphasise that we are talking about a response that takes a few minutes. They have to make this "hotswitch" between four and 12 minutes. And in the case of the failure that night, events occurred

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very quickly between 9.56 pm and 10.04 pm.

Let me move on now to the valve system at the ConocoPhillips facility. This system, unfortunately, has failed on five separate occasions for five different reasons since August 2002. I think Members of this House will agree that this is clearly not acceptable. EMA has instructed ConocoPhillips to do a comprehensive technical re-evaluation of its system design and operations, including maintenance and operational procedures. It must submit its report to EMA within three months. Furthermore, EMA will bring ConocoPhillips under licensing control by the end of the year.

I would like to address concerns expressed by many that we are apparently relying too much on a single source of fuel. Today, we have a good balance of steam plants using fuel oil and gas plants generating electricity. About 60% of our installed capacity consists of steam plants and 40% comes from gas plants. Fuel oil for the steam plants is available from multiple sources. For gas plants, the backup is diesel, which is also widely available. Every power station is required to stockpile at least 90 days of fuel reserves, with at least 45 days worth of these reserves being kept on site. Overall, our total supply capacity is almost twice our peak demand. In short, we can actually operate without gas indefinitely if we have to, albeit at a slightly higher price.

EMA is exploring with the generation companies how to back-up gas from dual sources for operational continuity. These dual pipeline feeds will give power stations those precious extra minutes to make a successful "hotswitch". In addition, EMA is also studying the feasibility of having compressed gas storage. This would, in effect, provide another additional source of redundancy. Over the longer term, we are also

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exploring the possibility of Singapore having a liquefied natural gas (LNG) facility. We will be conducting a feasibility study, and if the findings are positive, the LNG facility should be operational soon after 2010.

Let me now touch on the second group of power failures due to grid infrastructure and accidents at worksites. Other power failures may be caused by faults within the grid infrastructure or damage to electricity cables. For instance, on 13th April 2004, a cable fault developed at the Choa Chu Kang substation, which caused a blackout that lasted about 60 minutes and affected 80,000 customer accounts. On 2nd July 2004, electricity supply to 28 HDB blocks at Pasir Ris was interrupted for about 30 minutes, and this was due to a tripping of substation equipment during a testing of the remote control equipment.

Our power infrastructure must have top class standards of reliability. This requires continual investment and maintenance of equipment. EMA will be imposing higher standards on all the companies involved in this entire system. These companies will have to meet these stringent standards or face financial penalties of up to $2 million for each performance failure. These changes will take effect from 1st August 2004. EMA will release details of these shortly.

Dr Warren Lee has asked how often construction accidents caused damage to major electrical cables. In 2003, there were 15 such incidents. Since 2001, 21 contractors have been brought to court, of which 12 have been fined and nine cases are pending. Errant contractors found guilty by the court can be fined up to $1 million.

Dr Khor has asked whether adequate measures have been taken to ensure that we minimise the risks of sabotage of our gas and utility supply by terrorists. I

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would like to emphasise that the recent power outages were not due to terrorist sabotage. Nevertheless, under our law, power stations and major transmission substations are gazetted as protected areas. Security measures were reviewed and augmented after the September 11 incident. There are tight access control, vehicle road barriers and armed guards at critical installations. Security patrols and surveillance are undertaken round the clock to reduce the likelihood of sabotage and intrusion. We will continue to be vigilant and will take all necessary actions to safeguard such critical infrastructure.

Finally, I would like to announce that the Ministry of Trade and Industry (MTI) will be setting up a high-level Energy System Review Committee, which will include international experts, to take a fresh look at our electricity and gas systems in totality and recommend how we can improve them further. This will ensure that our systems are sufficiently robust against accident or disaster.

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Deputy Speaker, Sir, this is a very important topic of much public interest. I have a few questions, and I shall be brief.

I heard the Minister of State say that the penalties will be increased up to $2 million. For parties that are found responsible for causing major blackouts where the fallout and the damages could be very high, should the Government not consider imposing higher penalties than $2 million, so as to serve as a deterrent? Also, should further higher penalties be imposed for repeat offenders? In the case of the ConocoPhillips, I just heard that it was the fifth time that it has caused a blackout.

The second question is this. In certain instances where there is a commercial arrangement between, say, ConocoPhillips and SembGas, I was told that the

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Government has no power to control such commercial arrangements. Is it true, and if it is true, would the law be amended to allow the Government to have more powers to monitor and control the market, and find out the causes for the blackout?

The third question is whether the Government actually has a central body or authority with the expert knowledge to constantly review various alternative sources for gas or oil, and even for other forms of energy like solar or tidal, so that we can have more sources for our supply.

Finally, during a blackout, many people made phone calls and the phone line was jammed, especially the important lines like 999 and 995. Should the Government not consider setting up another line, for example, 911 - sorry for the pun, but it is a number which is very easy to remember - for the public to call on such emergencies, not fire or police matters but national emergencies like a blackout, so that people get information and know what is happening?

Dr Vivian Balakrishnan: I thank the Member for his supplementary questions. The first issue is on penalties. There is an escalating scale of penalties. If a company repeatedly fails in achieving the required standards, the cumulative penalties will exceed $2 million, just by adding it up. But having said that, it is not just a matter of penalties imposed by EMA. Do not forget that

there are also market mechanisms which will punish companies which do not fulfil their contractual requirements and these companies may also be subject to legal action by other parties whom they have contracted to supply power.

The next point is about jurisdiction over commercial operators. That is partly the reason why we have decided to bring ConocoPhillips facility under our licensing

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requirements, to give us more regulatory teeth to ensure that all players in the energy system perform their roles according to specifications. As far as having a Government agency to oversee energy, we have the Energy Market Authority which has the experts to keep an eye on the entire energy system, including alternative sources of supply, new technology changes and, in turn, EMA is supervised by the Ministry of Trade and Industry.

The final point is on information flow. I do not believe having another line will solve it because that other line will also become clogged with everyone calling in. I think the most practical means of information flow during emergencies like that would be to use the radio and, in particular, battery-operated radios which will work in almost all circumstances, and to ask the public to make phone calls to emergency services only if they actually need it, and not just to make phone calls to seek more information. Of course, we understand that these are times when there will be high anxiety and the authorities, EMA and everyone will be scrambling to do two things, ie, to fix the problem immediately and also to push the information out to the public. So I hope the public will cooperate in times like these and use more passive ways of information retrieval which will not clog up the telephone lines.

Mr Tan Soo Khoon (East Coast): Mr Deputy Speaker, I have several questions for the Minister of State. First of all, are we not making ourselves vulnerable by just depending on one sole supply of gas? Do we have a back-up plan for alternative supply of gas? In fact, more pointedly, I would like to ask why is it that we have never thought of a back-up plan although we had several cases of power failures in the last two years. Why have we not thought of such a back-up plan long ago so as to avoid a systemic failure like the one we experienced on 29th June?

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Sir, the next point I would like to raise is the question of damage which has been caused to a lot of electronic equipment. In fact, a very angry constituent of mine told me that during the failure on 29th June, his TV set was badly damaged and he had to pay $200 to get it repaired, and he asked me if this keeps happening, who is going to be responsible. So my question is, while it is very well to have increasing penalties imposed on the power supply companies - but this money goes to the Government - could not somebody, whether the power companies or the Energy Market Authority, be made responsible in some way or other for the damage that is being caused to equipment which is owned by consumers and Singaporeans at large?

Dr Vivian Balakrishnan: Mr Deputy Speaker, we do not have only a single supplier of gas. There are three pipelines bringing in natural gas to Singapore - one from Natunas, another one from Asamera, and the third one comes from Peninsular Malaysia and lands at Senoko. Having said that, his question is a valid question, ie, what is the back-up when, for any reason, the gas fails? As I explained earlier in my answer, the back-up in such circumstances is for our gas plants to switch to diesel of which we have more than adequate reserve stocks of, and for which we can replenish from multiple sources. The problem on that particular day was that the "hotswitch" process failed in five out of six gas plants. If the "hotswitch" process had not failed and, in fact, this occurred in December 2002 when, despite disruption of gas supply, the gas plants made a successful transition on to the back-up field. The result of that is that, I think, practically all Singaporeans were not even aware that there was a problem with the gas supply.

So I want to emphasise that there is a back-up, and it uses diesel as a back-up. But having said that, his next question then should be, is there anything else we

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can do to further harden the system. Our answer to that is yes, and we are working on it. That is why we have been encouraging the generation companies to do so. They, in fact, on their own initiative, have now gone on to have dual pipelines, ie, each company will have two feeds of natural gas. In addition to that, exploring whether we should have on-site or even off-site storage of compressed natural gas gives us another back-up plan and ultimately, of course, would be to consider even LNG, which then immediately increases our potential suppliers of gas. So I want to just reiterate that we have both immediate, short-term and long-term plans to back-up this essential infrastructure.

On the question about damage to TV sets, my understanding is that several people noticed some discoloration on their TV screens after the power was restored. I have been informed by the technical people involved that this was due to problems with the degausser within the TV set coming back on when it was still warm, and that the fix for it really was to switch off the TV set and disconnect it, and let it cool down for an hour or two. This is what most people did and most people would by now have realised their TV sets are working fine. But having said that, I recognise that there are some people who may have sustained more long-term damage to their equipment. I believe that, as far as consequential damage to the equipment is concerned, this becomes a legal issue, a contractual issue, which, if they wish to pursue, they can take upon on their own volition. But the Government and EMA cannot warrant that all equipment will never be damaged by any incident, accident or problem like this.

Mr Low Thia Khiang (Hougang): Sir, the Minister of State, in his reply, says that Singapore's international reputation is seriously affected. I would like to know how serious it is. Does this mean that it

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will affect foreign direct investments in Singapore? And what is the Government's plan to mitigate the situation?

Sir, the second question is on ConocoPhillips. I would like to know on what consideration has the Government given the contract to ConocoPhillips to control the supply of gas to Singapore, why has the Government not considered it necessary to bring the company under the licensing requirement earlier, and what is the relationship of the company with our GLCs. Is it a GLC by itself?

My third question is a follow-up from the answer from the Minister of State. He says that there is a back-up plan, but the back-up plan has not worked or failed. My question is: has the back-up plan been tried before? Or was it just a back-up plan and it has never been tried to see whether it works? If it had been tried before, why has it failed this time?

Dr Vivian Balakrishnan: Mr Deputy Speaker, damage to the reputation is difficult to quantify in exact terms. So I cannot give him a dollar amount.

Will this affect investors' confidence in us or attractiveness as a destination? I think the answer to that is that if we do not show resolve and we do not show that we have got a clear and proper plan to fix the problems, then we will really reap the bitter harvest of this. So our approach has been to identify what was wrong and to take all immediate steps to fix operational problems on the ground, and to look at the system, harden the system, build back-up to back-up plans, if need be and, ultimately, to restore confidence on both the part of locals as well as investors who depend on a stable and reliable electricity supply. I think it will be pointless to try to calculate the dollar sums for the damage to the reputation that we have incurred.

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ConocoPhillips is a commercial company. It has commercial arrangements with the gas suppliers and with the generators that take gas from it. The Government is not involved in it. Has the back-up plan been tried before? The answer is yes. As I alluded to it earlier, in December 2002, despite the valve system at ConocoPhillips failing, the back-up plan kicked in and the generation companies successfully made that transition to diesel, and there was no power disruption. Yes, it failed this time. Clearly, what our take-home point now is that we need to harden the back-up plan further. And as I have said earlier, by resetting the SOP, so you react earlier, and you reduce your gas consumption at an earlier point in time so that there is more gas left in the system. You make sure that all the ancillary equipment needed to "hotswitch" the diesel pumps, filters, and all that, are working, and that your people are practised. The power companies' mandatory practice or drill was once every three months. But if we actually look at the records, they were actually doing it much more often than that. I have personally gone down to a power station and seen with my own eyes that the people are well-trained and they know what to do. But in all these situations, when something really does go wrong, it is often a series of small problems which added up and ended in a catastrophic situation, like what we experienced on 29th June.

Will it happen again? I can tell you quite categorically that if the same sequence of events on 29th June, ie, the problem with the valve, occurred today, it would not lead to a blackout. But that is with the advantage of hindsight. In retrospect, we know where the problems are and we will fix them. What we are focused on now is to prospectively look at the system and harden it further. I think we will certainly get better with time, but our target ultimately must be one in which the possibility of failure is infinitely small.

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It can never be zero and, even if it fails, the impact would be minimised.

Mr Low Thia Khiang: The Minister of State forgot to answer my question on why the Government did not see the need to bring ConocoPhillips into the licensing ambit earlier.

Dr Vivian Balakrishnan: The answer is that we did not think it was necessary at that point in time. But clearly, as I have announced earlier, we now do believe that it is necessary to bring them under the licensing requirements.

Dr Warren Lee (Sembawang): Mr Deputy Speaker, Sir, the Minister of State, in his reply, alluded to two sets of problems that can cause power failures. One was the generation of electricity, and the other was the switching system in the event that one part of the system fails. I wonder whether he could enlighten us on any plans that the Government or the Energy Market Authority has in place or made possible in the near future on switching to another part of the system in the case of isolated instances of power failure.

Dr Vivian Balakrishnan: I presume he means when there is a localised failure, whether there are alternative channels of power to be supplied to that area so that there is no disruption.

Dr Warren Lee: I think it is a technical term which refers to the way that a load is redistributed within a network, as opposed to switching of fields.

Dr Vivian Balakrishnan: The answer to that is yes. There is a complex control system that continuously, in real time, balances supply versus demand, and also, if need be, if one part of the network goes down, as long as there are alternative channels, it will route electrical supply through these alternative channels, so that there is no disruption.

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But, again, I do not want to pretend that this is a simple system that will work totally according to plan all the time. However, the Member's question is: is there such a system? Yes. Do we have a state-of-the-art system? Yes. Do we still want to make sure that we try to improve it further? Yes.

Mr R Ravindran (Marine Parade): Sir, I recollect when there was a major blackout in the USA, a question was raised in this House as to whether we could have such a blackout, and I do remember the answer was that it should not happen in Singapore. It has happened, and I am very sad, and I would like to ask three questions.

Firstly, will the Ministry be looking within the Ministry and the regulators of the industry to see whether there were some incompetent decisions made and whether there was complacency among some of these key scenario planners or regulators?

Secondly, when a major blackout happens in Malaysia, they are able to tap into our grid and take electricity supply immediately. In the instance when we had a blackout, why were we not able to tap into the neighbouring country's electricity grid and at least get some supply of electricity from the country?

Thirdly, many people were affected by this blackout. Not only were consumers affected, but a lot of companies were also affected. Could we have in place a body which could, in a way, look at the claims of these people who were affected by such a blackout and try to see whether we could consider giving damages or compensation for various losses or damages suffered by both consumers and the companies involved?

Dr Vivian Balakrishnan: During the on-going investigation by EMA, and indeed

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subsequently by the Energy System Review Committee, if we discover any incompetence, negligence or, as you have alluded to, complacency, the Government will take action.

The second question was on our inter-connection to Malaysia. There is an inter-connection between the Singapore and Malaysian electricity systems. But this pipeline, so to speak, is basically meant to assist in load balancing for small degrees of fluctuation. On a night when you lose 30% of the capacity, this inter-connect must shut down, and the reason it must shut down is that, otherwise, you will get a sequential collapse of whole regions and, possibly, even extending across countries. So, Malaysia does not want to have a blackout because we have a problem, nor do we want to have a blackout in Singapore because of a sudden catastrophic failure in Malaysia. So, although there is an inter-connect, it is not designed to respond to losses of 30%, as what we experienced on 29th June 2004.

The third point on whether we should have a body to award damages, Mr Deputy Speaker, I am very reluctant to go down that route. I would rather focus on making sure our system is as robust as possible, and that the impact of such failures is minimised. Over and above that, if companies wish to pursue their legal options or exercise their contractual rights, I think they are free to do so and to go down the legal route.

Dr Lily Neo (Jalan Besar): May I ask the Minister what has happened to the plan of building a liquefied natural gas (LNG) terminal at Tuas which was announced in 1999? Have there been feasibility studies done for such LNG terminals since 1999? Will he now seriously consider building LNG terminals and storage of LNG in order to ensure the

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uninterrupted supply of natural gas in Singapore?

Dr Vivian Balakrishnan: The feasibility study on whether or not to have an LNG terminal will commence later this year. I do not want to make any conclusions on what that study will show. But I also want to add, however, that we did not make that decision to embark on a feasibility study because of this blackout. There were other strategic and commercial reasons to consider this, and we will await the results of the feasibility study before the Government makes a considered decision.

Mr Steve Chia Kiah Hong (Non-Constituency Member): Mr Deputy Speaker, Sir, why are these additional back-up plans like the dual pipelines, as mentioned by the Minister of State, not considered after the 2002 blackout? Why did EMA actually wait until after this recent blackout to further consider these additional back-up plans?

Dr Vivian Balakrishnan: The generation company at Senoko already has dual pipelines. The PowerSeraya and Tuas generation companies already had plans in place to install dual pipelines even before this blackout. So, it is not for lack of consideration or forethought.

Mr Deputy Speaker: I will allow one last question. Mr Arthur Fong.

Mr Arthur Fong (West Coast): Mr Deputy Speaker, in the same question in 2002, after the US blackouts, we were told that some of the reasons were inadequate capacity, diversity of supply, etc. But among the answers given were that we also carried out regular exercises in Singapore to check the integrity of our electrical system. When was the last check done before this recent major blackout? If the audit of the system did reveal any weaknesses, or the scenarios

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that Mr Ravindran talked about, could it have helped us prevent this last blackout?

Dr Vivian Balakrishnan: I cannot give a detailed answer as to exactly when the last system-wide test was performed. But last night I was going through the records of the "hotswitching" drills that the companies had gone through and, within the month of June itself, there was at least one company which had done it twice. So, it is not for lack of going through the drill, and it is not for lack of education or training on the part of the operators.

However, I just want to say that on the 29th June, it was a hitherto unexpected and unanticipated problem. If it had been a simple shutdown of the emergency valve or a repeat of incidents which occurred in 2002, we would not have experienced this blackout. Instead, we had a pressure valve malfunctioning, first closing and then suddenly opening, overcoming the back-up system, and then the emergency shutdown valve having to kick in because of safety concerns. In that space of eight minutes, we lost precious time, and that precious time then cost us the ability to "hotswitch" in time before the gas ran out.

Sir, I am not offering this as an excuse. I am just offering an explanation for what went wrong. It was an unanticipated sequence of events. But we can fix this, and we intend to fix this. If we look at our plans both in the short and long-term, we will have additional back-up measures, additional robustness within our system, and I think we will all emerge ultimately stronger for this experience.

Mr Deputy Speaker: Ms Irene Ng, can you ask the next Question?

Ms Irene Ng Phek Hoong (Tampines): Sir, can I just ask one last supplementary question, please?

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Mr Deputy Speaker: No. I think we have spent enough time. Can you ask the next Question?