Implementation Roadmap for Full Open Electricity Market for all Households

10 Ms Sylvia Lim asked the Minister for Trade and Industry (Industry) what is the implementation roadmap and timeline for the full Open Electricity Market to all households islandwide.

The Minister for Trade and Industry (Industry) (Mr S Iswaran): Mr Deputy Speaker, the Open Electricity Market will commence in Jurong in April 2018 and will provide around 120,000 household and business accounts with the choice to buy electricity from a retailer with a price plan that best meets their needs. Those who prefer to continue buying electricity from the SP Group at the regulated tariff can also continue to do so.

This soft launch will allow the Energy Market Authority (EMA), the SP Group and electricity retailers to gather feedback and fine-tune their processes and backend systems before the Open Electricity Market is extended to the rest of Singapore in the second half of 2018.

Ms Sylvia Lim (Aljunied): Mr Deputy Speaker, I have five supplementary questions for the Minister.

The first is we do understand that the pilot is in Jurong and the areas demarcated by postal districts are, I understand, for the postal codes starting from 60 to 64. So, I would like to ask for the rest of the island, whether the plan is to also have staggered commencement based on postal districts or is everybody going to go live at the same time for the rest of the people outside Jurong? That is the first question.

The second question is: I understand that there are about 26 licensed retailers of electricity. EMA had previously said that not all the retailers may be involved in the soft launch. So, I would like to ask the Minister whether there is any clarity now on whether certain specific retailers will be involved and whether this was their own choice or some vetting process by the EMA.

The third question is that we understand that EMA has committed to making switching over easy for consumers. I would like to have some elaboration on that. For example, I assume that consumers will have to change their meter boxes, so who is going to pay for that?

The fourth question is the Minister earlier said that we are having a pilot so that we can also study how it pans out. And if there are any feedback from the pilot, we can fine-tune for the rest of the island. So, I would like to ask whether the Government anticipate certain specific challenges from the pilot and whether there is a possibility that such challenges and fine-tuning may set the timeline back to beyond 2018 for the rest of the island?

Finally, the last question, we have noted that in other countries where there is a choice of electricity retailers, there may be information given to consumers about price comparisons. This may be done by the vendors themselves, for instance. In some of these countries, the regulator actually takes on the role of accrediting whether that information is accurate, to ensure that the consumers are not duped or given inaccurate information. An example is, I think, in the United Kingdom, where the Office of Gas and Electricity Markets (Ofgem) does this sort of accreditation of information. So, I would like to ask the Minister whether the EMA, for example, is considering such an accreditation role, so that the consumers will have accurate information.

Mr Deputy Speaker: May I remind Members that supplementary questions may be put for the purposes of elucidating an oral answer. That is under the Standing Orders. So, could Members keep their supplementary questions short?

Mr S Iswaran: Thank you, Mr Deputy Speaker. I thank the Member for her keen interest in this initiative. I was heeding your advice and that is why I kept my initial answer short to allow for supplementary questions. There is five, then we try and do justice to some of them, at least.

The pilot in Jurong, does that mean that we will have staggered implementation across the board. That is exactly why we are having a pilot because we need to understand. Notwithstanding the best of efforts and planning ahead, this is a massive exercise because it would involve over a million accounts, island-wide eventually, and that is why the idea of focusing it on one district or one area like Jurong, which in a way reflects the diversity or our household and business types. And that, I think, would enable the key entities – EMA, SP and the retailers – to also understand if there are any unanticipated challenges. It is precisely that they are unanticipated that I cannot tell the Member, in answer to her fourth question, do we anticipate any specific challenges. That is exactly why we are having the pilot to see if there is something unanticipated or something that is coming in from a different angle that we had not foreseen, and that is the purpose behind it.

So, the answer is, if the pilot goes well, then I think we should be able to stick to the timeline and move towards the second half for complete implementation. If, however, there are reasons to review that, then we will do so, and we will convey that. The most important point here is the customer experience has to be a good one, and we want to avoid having undue disruption or concern amongst our consumers. So, that is our priority in this exercise.

Retailers, yes, there is a vetting process. EMA is now in the process of vetting and qualifying them. They are applying a fairly tight set of criteria. The reason is because unlike the current situation where the retailers are essentially dealing with businesses who are in the contestable market – I understand it is about 90,000 accounts – we are now moving towards households. And therefore, there is a need to make sure that there is an appropriate set of rules governing their conduct and capabilities that the retailers are able to meet.

So, this is a process that EMA is going through now in its engagement with the retailers. Before we start a pilot, it should be quite apparent how many and the identity of these retailers.

Switching is easy, but what about meters? Again, this is something that will be elaborated. But, essentially, the way the Open Electricity Market is designed − I do not want to get into a very technical discussion − it means you can do a switch without having to have what they call "smart meters" or "advanced meters". It is possible and, in fact, our system is designed to do that. It is based on a principle called "load profiling" instead. However, if you have advanced metering infrastructure, it allows for greater flexibility and the kind of plans.

This is something that EMA is studying. In the commercial market, in general, when they opted to become contestable and sign up with retailers, they have had some advanced meters installed. In the case of households, it depends because if their consumption levels are not very high, it may not merit that kind of investment. On the other hand, advanced meters do provide a lot more data which can be very useful for both policy and for system optimisation. So, we have to work out the trade-offs and design.

On price comparisons or accreditation, the intent is to provide as much information as possible to consumers so that they can make informed decisions, and one part of that, apart from the general communications and media plan, is to have an online portal that will provide comparisons across different types of plans so that customers can then access this and then make the decisions based on their needs and they are informed by what these different plans offer.

Mr Png Eng Huat (Hougang): Thank you, Sir. Just a quick question. Currently, they are replacing the meter outside the houses. In Hougang, I saw them changing from a big one to a very small one. Are those smart meters? So, are they contestable-ready?

Mr S Iswaran: I do know about the specific meter. Is the Member talking about household meters?

Mr Png Eng Huat: Yes.

Mr S Iswaran: So, I do not know about the specific meters in Hougang. But I would say that, in general, the replacement for households has not been about going towards smart meters. That is an entirely different exercise. Indeed, when you deploy smart meters, you also need to have some backend systems that are able to use them. Otherwise, it is effectively a dumb meter because it does not do much more than a conventional analogue meter. So, this is something that we are studying. I would say that, most likely, it is not, because there has been no plan to implement advanced metering for households.