Singapore electricity providers hit by global power crunch quit market (updated)
14/10/2021 12:13
(Adds comment from SilverCloud Energy)
By Roslan Khasawneh and Jessica Jaganathan
SINGAPORE, Oct 14 (Reuters) - Two energy providers in
Singapore, including one of the largest independent electricity
retailers, are exiting the market and according to company
sources at least three others have stopped accepting new clients
amid rocketing wholesale energy prices.
iSwitch Energy, one of Singapore's largest independent
electricity retailers, said on its website that it will be
ceasing electricity retail operations on Nov. 11, due to
"current electricity market conditions". The company declined to
comment further.
SilverCloud Energy, which supplies power to commercial,
industrial and residential buildings, told Reuters it will also
exit the market soon and is notifying customers to switch to
other providers or transfer back to state-owned SP Group.
L4N2RA2SF
Global wholesale gas prices have surged in recent months as
production and transit problems have lowered supply just as
demand took off in a post-pandemic economic recovery.
Asian spot LNG prices LNG-AS have risen by more than 500%
from a year ago to over $30 per million British thermal units
(mmBtu) this month while Brent crude oil prices LCOc1 , the
basis for pricing most of Singapore's long-term gas contracts,
rose to multi-year highs.
Company sources told Reuters that Diamond Electric, Best
Electricity Supply and Ohm Energy had stopped accepting new
customers, with Diamond Electric in the process of handing over
existing term contracts to another utility provider. The three
firms did not respond to an emailed request for comment.
"Not only are retailers unable to sell to retail customers
at a level that is economic because the set quarterly tariff
implies a price that is well below where futures are trading,
they are also getting hit on the front-end because spot prices
have gone ballistic," said James Whistler, global head of energy
at Simpson Spence Young.
"Add the failure of the once well-designed market-making
scheme and things become untenable for many."
Open Electricity Market, a website that lets Singapore
residents choose an energy supplier, shows only 8 out of the 12
existing retailers offering plans for consumers.
With the spike in energy prices, "several Singapore
retailers are now potentially closing their doors," said a
senior industry participant who declined to be identified due to
the sensitivity of the matter.
Singapore's retail electricity market opened to competition
for business consumers in 2001 and to residential households in
2018, according to the Energy Market Authority (EMA) website.
EMA did not reply to a request for comment.
Surging gas prices, which rose to record highs in Europe and
in Asia this month, have also hit utility providers in Britain,
where a number of energy companies have collapsed, forcing about
1.7 million customers so far to switch providers. urn:newsml:reuters.com:*:nL4N2R2216
China and India are being hit with power shortages and
blackouts. urn:newsml:reuters.com:*:nL1N2R80UQ
In Singapore, electricity tariffs are calculated using fuel
costs and non-fuel costs.
The fuel cost component for each quarter is calculated using
the average of daily natural gas prices in the first
two-and-a-half month period in the preceding quarter while the
non fuel-cost is calculated based on the cost of generating and
delivering electricity to homes.
Singapore LNG Corp is currently scouting for LNG cargoes and
exploring options to increase inventory of LNG at its terminal,
given the tight global LNG supply. urn:newsml:reuters.com:*:nL4N2RA1T7
Commercial load power prices have risen by 50% from last
year and are set to go higher, Whistler said.
"This is a pretty big difference for a country that has been
relatively used to reasonably priced power now moving into a
less competitive market and essentially being subject to global
commodities prices as well."
(Reporting by Roslan Khasawneh and Jessica Jaganathan
Editing by Elaine Hardcastle and Peter Graff)
((Jessica.Jaganathan@thomsonreuters.com; +65 6870 3822; Reuters
Messaging: jessica.jaganathan.thomsonreuters.com@reuters.net;
Twitter: https://twitter.com/j3ssi3))