25 August 2023
On 31 July 2023, the Energy Market Authority (“EMA”) announced that it will implement an enhanced regulatory framework for electricity retailers as one of the guardrails to strengthen the existing competitive market structure and ensure that Singapore is well positioned to navigate the energy transition. EMA has also issued a Final Determination Paper which sets out EMA’s final determination on the measures to be adopted after taking into consideration the comments and feedback received from a public consultation conducted between 1 February 2023 and 3 March 2023.
Set out below is a summary of the enhancements which EMA will implement:
- Capital requirements for all retailers: All retailers will be required to have a tangible net worth of at least S$1 million at the time of application for the electricity retailer licence or renewal thereof.
- EMA’s approval required for key appointments: All retailers will be required to seek EMA’s approval for the appointment of Key Appointment Holders (“KAHs”). KAHs include: (i) directors registered with the Accounting and Corporate Regulatory Authority (“ACRA-registered directors”), (ii) chief executive officers/managing directors (“CEO/MD”), and (iii) any person who is employed or engaged by the retailer and directly reports to the CEO/MD or ACRA-registered directors on matters pertaining to the electricity retail business.
- Hedging requirements for all retailers: Retailers will be required to hedge at least 80% of their contracted consumer demand on a rolling 24-month forward basis (“Forward Period”). EMA will allow each retailer to meet the 80% hedging requirement on a monthly average basis (i.e. 80% on average across all half-hour periods for a given month) for each month in the Forward Period. Further, retailers will be required to provide a performance bond covering their respective unhedged contracted consumer demand (which should be no more than 20% on a monthly average basis) across all months in the Forward Period. Retailers will be required to declare to EMA on their compliance with the hedging and performance bond requirements on a monthly basis. This will be augmented with regular audits. Further details on acceptable hedging contracts, the performance bond regime, and the audit requirement can be found in EMA’s Final Determination Paper.
- Consumer protection against premature contract termination: Retailers will be prohibited from terminating electricity retail contracts with any consumer on the basis of (i) the consumer’s insolvency, bankruptcy, or death, or (ii) the commencement of any bankruptcy or insolvency proceedings in respect of the consumer. Where there is early termination of any electricity retail contract by the retailer due to no fault of the relevant consumer, the retailer will be required to compensate the consumer based on equivalent early termination charges that the retailer imposes on the consumer.
According to EMA’s press release dated 31 July 2023, these enhancements will be progressively implemented from August 2023. EMA has stated in the Final Determination Paper that it will in due course conduct a public consultation on the proposed modifications to the Code of Conduct for Retail Electricity Licensees to effect the measures.
The following materials are available on the EMA website www.ema.gov.sg: