Electricity (Amendment) Bill

Order for Second Reading read.

3.55 pm

The Senior Parliamentary Secretary to the Minister for Trade and Industry (Dr Tan Wu Meng) (for the Minister for Trade and Industry): Mr Speaker, on behalf of the Minister for Trade and Industry, I beg to move, "That the Bill be now read a Second time."

The Electricity Act was passed by this House in 2001 to establish a competitive electricity market framework and provide for the safety, technical and economic regulation of electricity generation, transmission, supply and usage. The Electricity Act was last amended in 2006, mainly to enhance the regulation and licensing of the transmission of electricity.

Since then, the electricity sector has evolved with the increased proliferation of new technologies and business models. There is a need to update the Electricity Act to ensure that it continues to remain effective and relevant amidst the changing energy landscape. MTI and EMA are therefore proposing to update the Electricity Act in four key areas: first, enhancing the security, reliability and competitiveness of our electricity supplies; second, enhancing protection of critical electricity infrastructure and safety of electrical works; third, clarifying procedural and technical provisions in the Electricity Act; and fourth, aligning regulatory provisions in the Electricity Act with similar provisions in the Gas Act for consistency.

Similar to the Gas (Amendment) Bill, in finalising these amendments, MTI and EMA sought feedback from industry stakeholders and members of the public through a public consultation in June earlier this year. MTI and EMA have carefully considered all feedback received and incorporated them where relevant.

I will now outline the key provisions of the Bill, starting with the first area of update, which is to enhance the security, reliability and competitiveness of electricity supplies.

The first amendment, in clause 6 of the Bill, introduces a new section 20A, which allows EMA to direct the electricity transmission licensee and an electricity licensee to effect a connection between their respective electrical equipment, if this is necessary for network expansion in the public interest or to ensure the security and reliability of electricity supply to the public.

The transmission licensee operates the grid that transmits electricity generated by electricity generation licensees to consumers. When installing new transmission infrastructure to meet electricity demand, the transmission licensee may, in certain situations, need to connect its electrical equipment to that of other electricity licensees, to increase transmission capacity and supply for the entire system.

The direction will, in the first instance, require the transmission licensee and the electricity licensee to effect the connection and then agree on terms for maintaining the connection, including compensation to be paid by the former to the latter for loss suffered by the latter resulting from the connection. If both parties are unable to come to agreement on the terms, they can request the Minister to appoint an Appeal Panel under the Electricity Act to determine the terms, including compensation. The terms determined by the Panel will become effective and binding on both parties as an agreement from the date of the determination.

Mr Speaker, I would like to assure this House that before a direction is issued, EMA will seek to meet with the licensees and explain the need for the connection. EMA will also facilitate discussions to reach mutual agreement on the terms of connection. A direction will only be issued if both parties cannot agree on the terms of connection despite these efforts.

The second amendment, in clause 3 of the Bill, amends the regulatory and licensing provisions in section 6 of the Electricity Act to enable the Minister to specify other electricity-related activities that need to be regulated and licensed, beyond the activities presently stated in that Section. This aligns with similar regulatory provisions already in the Gas Act.

The third amendment, in clause 8 of the Bill, will allow licensees to apply for a Judicial Management (JM) order under Part VIIIA of the Companies Act once EMA's consent is obtained. The Electricity Act currently prohibits an electricity licensee from applying for a JM. While the intent is to ensure that critical licensees are not unilaterally placed under JM or dissolved, this restricts non-critical licensees from applying for a JM even though their restructuring or exit would not adversely impact our energy security and system stability. Hence, this amendment allows JM of a licensee if EMA's consent is obtained. This is similar to the amendment to the Gas Act.

The fourth proposed amendment, under clauses 5 and 15 of the Bill, amends the Electricity Act to reflect the right of small contestable consumers, that is, consumers whose average monthly electricity consumption for the preceding continuous 12-month period is less than four megawatt hours, to revert to purchasing electricity at the regulated tariff if they cannot, or do not wish to purchase electricity from electricity retailers or directly from the wholesale electricity market, or if their electricity retailer is unable to retail electricity to them for any reason. This is currently not clearly stated in the Act.

Mr Speaker, I now move on to the second key area of update to the Electricity Act – enhancing protection of critical electricity infrastructure in Singapore and safety of electrical works.

The fifth amendment, in clause 23 of the Bill, amends section 85 of the Electricity Act to rationalise the different offences currently provided in the section, which include offences relating to damage to land-based electricity transmission infrastructure. Such infrastructure is critical in ensuring the flow of electricity to businesses and households. The amendment also seeks to extend the reach of the section by making a person who causes or permits another person to damage land-based electricity transmission infrastructure guilty of an offence. There is no need for the former to have any particular relationship with the latter. This is similar to the amendment to the Gas Act.

The amendment further prescribes a maximum fine of $1 million and/or imprisonment of up to five years for all offences under the section, regardless of the type of electricity infrastructure involved and whether or not the damage is earth-works related. This is in line with the penalty provided in the corresponding section in the Gas Act, and will allow the Courts broader scope to determine appropriate penalties for such offences by considering such matters as the seriousness of the damage and its effects, and the circumstances in which the offence was committed.

The sixth amendment, in clause 22 of the Bill, amends section 82 of the Electricity Act to expand enforcement against persons carrying out electrical works without valid electrical worker licences, to include firms that provide electrical work services to consumers using workers who are not licensed electrical workers. This will better protect the interests of consumers when they engage firms to carry out electrical works at their homes or premises, and enhance safety by ensuring that only licensed electrical workers are employed to carry out electrical works.

Mr Speaker, let me now move on to the third key area of update – amendments to clarify and improve procedural and technical provisions in the Electricity Act.

Clauses 9 to 14 of the Bill amend Part IVA of the Electricity Act to bring controls on ownership, acquisition and divestment over electricity licensees in line with those in the Gas Act. This includes enabling the Minister to specify other electricity licensees as "designated electricity licensees" if the need arises.

Clause 21 of the Bill amends Section 80 of the Electricity Act to harmonise the scope of duties of persons carrying out earthworks with those in the Gas Act, which are currently broader.

Clause 29 of the Bill amends section 103 of the Electricity Act to enable EMA to recover costs for services provided in connection with its regulatory functions without having to prescribe the cost as fees.

Clause 28 of the Bill inserts a new section 100A to provide for various moneys collected by EMA under the Electricity Act to be paid into the Consolidated Fund.

Mr Speaker, finally, on the last area of update, let me highlight the key amendments to align specific provisions in the Electricity Act with similar amendments to the Gas Act, for consistency. As the justifications for these amendments have already been mentioned in the Second Reading speech for the Gas (Amendment) Bill, I will only mention them briefly here.

First, clause 16 of the Bill amends the Electricity Act to enable EMA to issue guidelines to signal to the market certain practices and conduct that are anti-competitive.

Second, clause 24 of the Bill amends the Electricity Act to make it an offence for any person to damage any submarine electricity cable belonging to, or under the control or management of an electricity licensee. Similar to the Gas Act amendments, the offence will carry a maximum fine of $2 million and/or imprisonment of up to five years upon conviction.

Third, clause 25 of the Bill amends section 87 of the Electricity Act to mandate that the court imposes an additional fine equivalent to three times the value of electricity dishonestly consumed, on conviction for dishonest consumption of electricity and meter tampering offences. It will also be an offence to do anything that compromises or affects the proper operation of a meter in duly registering electricity supplied to any person or premises. These are similar to the amendments to the Gas Act.

Last, clause 27 of the Bill amends section 98 of the Electricity Act to enable regulations to be made to specify the procedures for submission of appeals to and consideration of appeals by the Minister regarding EMA's regulatory decisions, similar to the amendments to the Gas Act on this.

Mr Speaker, in conclusion, the proposed amendments to the Electricity Act are necessary to update the Electricity Act and ensure that it continues to remain effective and relevant, going forward. Sir, I beg to move.

Question proposed.

4.07 pm

Ms Joan Pereira (Tanjong Pagar): Mr Speaker, Sir, there has never been a time when our world is more dependent on electricity as our world is today, and it will become even more so in the future when we become a Smart Nation. The massive power outage we experienced earlier this month is a reminder of how we should not take electricity for granted and how critical it is to secure and protect our power supply and transmission connections. The Bill will empower the EMA to direct the expansion of the electricity transmission network to ensure the security and reliability of supply when necessary, including for emergency situations like this. However, the recent blackout highlighted how centralised our operations are and the associated vulnerabilities.

I urge the Ministry to consider expediting the set-up of independent sources of electricity island-wide to provide backup power for critical installations, such as water pumps, elevators, traffic and street lights. In the event of a prolonged outage, these power sources will ameliorate hardships and reduce accidents.

I am aware that EMA is looking into the potential of micro-grids. These are small electricity networks which are usually connected to a centralised national grid but that can also operate independently. So far, these are only being tested at the Singapore Institute of Technology and Pulau Ubin. Would MTI and EMA make it a priority to extend these test-beds to more areas and institutions?

In different parts of the world, the building of micro-grids is gaining momentum as governments realise their potential in adding to energy security. They can be found in Amsterdam in The Netherlands, California and New York in the United States, Higashi Matsushima in Japan, just to name a few. A network of small, independent electricity grids also offers an alternative in the event of cyberterrorism targeting the national grid. In the US, the Department of Homeland Security and the FBI confirmed earlier this year that state-sponsored hackers had infiltrated the electricity grid. A leading cybersecurity firm, had also cautioned about cybercriminals posing a threat to utility operators. Hackers had caused equipment shut-down at a Saudi Arabian oil and gas plant and a smelter in a German steel mill to overload and destroy itself.

Next, I would like to request that EMA draws up guidelines to guide staff on how to disseminate information and updates to the public in the event of outages. During the recent blackout, hotlines were inundated and some people were unable to get their calls through. Good communication is important for reducing anxiety and panic among members of the public who have no idea how long the outage would last.

Finally, may I ask the Ministry how are the rates of the regulated tariffs are decided upon? It is not easy for consumers to decide which electricity retailers to choose from. The Open Electricity Market is a very new concept for most Singaporeans and many of my elderly residents may get quite confused. They cannot understand how a retailer can sell electricity at a more competitive price than the wholesale market. Would MTI be able to provide them advisory services as this would be very useful for the senior citizens, to make an informed choice?

Sir, I would like to conclude with my support for the Bill.

4.11 pm

Mr Speaker: Senior Parliamentary Secretary Tan Wu Meng.

Dr Tan Wu Meng: Mr Speaker, I thank the Member for the queries and support for the Bill. Let me first address Ms Joan Pereira's suggestions regarding our communication and contingency plans during a power outage.

We had discussed this earlier during the Round Up Speech for the Gas (Amendment) Bill and we very much agree that we can continue working on ways to improve by learning from best practices around the world, as well as experiences near and far.

Let me also address the Member's question on microgrids and cybersecurity. As the Member rightly noted, microgrids can operate independently during an emergency. And we are also studying various aspects of microgrids, because these can allow for easier integration of various energy technologies. So, for example, the upcoming microgrid at the Singapore Institute of Technology's campus in Punggol will be the first urban microgrid in Singapore that will integrate various types of energy technologies, including renewable sources and energy storage. There is also an ongoing microgrid test-bed at Pulau Ubin which is studying the real-world impact of renewable energy on grid system stability and reliability. These test-beds will provide useful insights to help EMA in planning for future grid designs, as well as the main grid to ensure resiliency. We will continue to explore where such microgrids would be suitable for deployment in Singapore.

As for cybersecurity threats to our electricity transmission system. I would like to assure the Member that the Electricity Act already gives EMA the mandate to address such threats, and EMA takes such threats very seriously. For example, under the Electricity Act, EMA is able to go after persons who hinder or prevent the grid from being used or operated in the manner in which it is intended for. The amendments to the Electricity Act make clear that this includes through wireless means, in addition to physical means. Furthermore, the Computer Misuse and Cybersecurity Act also includes offences relating to cyber attacks or hacking, such as the unauthorised access to computers or computer systems, and unauthorised use or interception of computer services.

We have also formulated a cybersecurity governance framework for the energy industry in close partnership with the Cyber Security Agency (CSA). The energy industry's Critical Information Infrastructures (CIIs) also adopt best practices in security management. So, for example, the computer systems in CIIs are isolated from the Internet. In addition, there are regular industry-wide exercises and sharing sessions to ensure the sector's resilience and readiness in emergency responses to cyber attacks. We will continue to work with CSA and the industry, to ensure the robustness and relevance of our cybersecurity governance framework.

I will now address the Member's queries regarding contestability and the Open Electricity Market, or OEM, for short.

The Member asked about how the regulated tariff is determined and why retailers can charge less for their electricity packages. The regulated tariff, charged by SP Group and approved by EMA, is set based on a fixed formula that reflects the long-term costs to produce and deliver electricity in Singapore.

4.15 pm

SP Group is required to supply electricity to all consumers, and has to bear the risk of an uncertain consumer base as it does not tie down its customers to any contract or impose early termination charges.

On the other hand, retailers are able to set their prices based on their own business strategies, to adapt to shorter term factors such as prevailing market conditions and level of competition.

We do share the Member's concern over ensuring that all households, including our senior citizens, and small businesses are able to make an informed choice on their electricity supplier.

To this end, EMA uses regulatory measures, as well as community outreach.

As the regulator, EMA requires retailers to present and seek households' acknowledgement of the Consumer Advisory and Fact Sheet on the key contractual terms, such as payment terms, contract duration, security deposit and early termination charges. EMA also requires retailers to safeguard all security deposits collected from households.

For community outreach, EMA will also embark on education and awareness campaigns to inform consumers about the OEM and what to look out for when switching to a retailer. EMA is also working closely with various Grassroots Organisations to ensure that senior citizens are kept informed as well, especially seniors who are not so literate or not literate. This is one of the reasons why the nationwide rollout of the OEM from 1 November 2018 will be done in zones, so that EMA and retailers can focus their resources to help consumers better understand their options before making a decision.

Mr Speaker, I would like to emphasise that consumers who do not wish to switch to a retailer can remain with SP Group and continue buying electricity at the regulated tariff. As a consumer, you do not need to switch, there is no deadline to switch, and you can take time to consider your options and whether to switch.

The proposed amendment to the Electricity Act today also clarifies the right of small contestable consumers to revert to buying electricity at the regulated tariff, if they cannot, or do not, wish to purchase electricity from a retailer. This amendment covers all households.

Mr Speaker, I would like to thank the Member who has spoken on this Bill, and the valuable comments provided. In summary, this Bill will ensure that the Electricity Act continues to remain effective and relevant in ensuring the safe and reliable supply of electricity, amidst the changing energy landscape. Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Dr Tan Wu Meng].

Bill considered in Committee; reported without amendment; read a Third time and passed.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.40 pm.

Sitting accordingly suspended

at 4.20 pm until 4.40 pm.

Sitting resumed at 4.40 pm

[Deputy Speaker (Mr Lim Biow Chuan) in the Chair]