GUARDRAILS FOR ENERGY MARKET
MTI in October announced new guardrails to protect consumers from volatility in three key areas of power generation, natural gas supply and electricity markets.
Recapping the measures, Mr Tan said the Energy Market Authority (EMA) would introduce a centralised approach to facilitate investments in new generation through a competitive tender.
MTI would also make permanent some measures put in place last year to stabilise the market, namely regulations that required gencos to maintain sufficient fuel for power generation, and the standby fuel facility to guard against risks of gas supply disruptions.
EMA would work with the energy industry to explore ways to aggregate gas procurement and obtain longer-term, more secure contracts, added Mr Tan.
MTI would also enhance regulatory requirements for energy retailers, including raising the qualifying criteria so that only those with “sufficient financial strength and sustainable business propositions” would be allowed to sell electricity to consumers.
Addressing a question from Ms He Ting Ru (WP-Sengkang) on whether retailers could be prohibited from prematurely terminating contracts with retail consumers, Mr Tan said this was already the case under the code of conduct for retail electricity licensees.
“Retailers cannot unilaterally terminate contracts unless under stipulated conditions such as if they are exiting the sector, or consumers are insolvent or had a breach of contract,” he said.
Mr Tan added that EMA will launch a consultation in the coming weeks on specific proposals to enhance the regulatory requirements for retailers.
As for consumers, EMA would look into tightening the eligibility criteria for wholesale electricity price plans, so that only larger consumers who are better equipped to deal with the risks of price volatilities would be allowed to enter into such plans, said Mr Tan.
“All consumers will continue to have the option of entering into retail contracts with electricity retailers, or, in the case of households and small business consumers, returning to the regulated tariff,” added the minister.
EMA was also in talks with energy market participants on operational measures to strengthen the wholesale electricity market.
“Our experience over the past year has demonstrated that a robust wholesale electricity market can have a stabilising influence on the broader retail market and is an important pillar of our efforts to strengthen the electricity retail market,” said Mr Tan.
He said EMA would consult the industry and public on the details of these plans, which are planned to be implemented progressively from 2023.
Mr Tan acknowledged that the measures will incur higher costs, and said that MTI and EMA will implement them in a way that balances the cost burden while ensuring that electricity remain affordable.
“But the value of a more stable, secure and resilient energy system cannot be overstated. It is fundamental, it is foundational to our ability to grow our economy to create good jobs for our people and to maintain our quality of life,” he said.
Source: Channel News Asia