SINGAPORE: Within days after electricity retailers were allowed to begin marketing their services to residents in Jurong, Mr Wang Zhili made up his mind to sign up with independent provider Ohm Energy.
Likening the liberalisation of the retail electricity market to the opening up of the local telecoms market years ago, the 30-year-old said he is “happy” about having the option to pick a power provider with the best deal. Currently, households buy electricity solely from SP Group at a regulated tariff that is reviewed quarterly.
“Electricity is a key part of a household bill. If there is a chance to go for a cheaper price plan, why not?”
With his new 12-month plan charging 16.95 cents per kilowatt hour (kWh), almost 5 cents lower than SP Group’s current electricity tariffs, Mr Wang is expecting a much leaner bill from this month.
Mr Wang is among those living in Jurong who are included in the pilot launch of the Open Electricity Market – an initiative by the Government to open up the power market to competition.
From Apr 1, about 108,000 household and 9,500 business accounts in Jurong have been allowed to go shopping for electricity retailers other than SP Group. For the soft launch, 14 players, which consisted a fair mix of big firms with power generation arms and independent retailers, were approved and given the green light to start marketing on Mar 19.
Since then, the response has been “encouraging”, according to retailers that Channel NewsAsia spoke to.
Among those willing to reveal sign-up rates, PacificLight Energy has attracted more than 1,200 customers, while both Tuas Power Supply and Best Electricity Supply said they are fast approaching 1,000 sign-ups.
Ohm Energy said it has about 800 consumers on board. Solar energy firm Sunseap and Red Dot Power described their sign-ups thus far as “a three-digit figure”.
Other retailers declined to reveal figures citing commercial sensitivity, but they agreed that consumers seem to be warming up to the idea of a liberalised retail electricity market faster than they expected.
“Electricity is something that’s not the easiest thing to explain. There will be customers who hesitate but thus far, what we’ve seen has been encouraging,” said Mr Low Boon Tong, executive vice president of retail at Seraya Energy.
Describing the response over the past few weeks as “enthusiastic”, iSwitch’s spokesperson Ross Han said: “Other foreign markets, like Australia or the United Kingdom, took a much longer time to get started so we are happy.”
When contacted, the Energy Market Authority (EMA) declined to reveal the number of consumers in Jurong that have opted for a different retailer thus far. Its spokesperson said based on feedback from participating retailers, “the response has been encouraging”.
COMPETITION HEATING UP
But with 14 retailers approved from the get-go, competition has been sizzling since the soft launch began.
To entice consumers, a majority have adjusted their plans in the form of price cuts, steeper discounts and rolling out shorter-duration contracts.
Plenty of freebies were also doled out. When Channel NewsAsia visited a roadshow organised by the EMA over the weekend at Westgate mall, iPads, the latest Google Home Mini smart speakers, shopping vouchers and air tickets were among the rewards dangled out.
PacificLight Energy, for instance, reduced the price of its fixed price plan to 16.78 cents per kWh, from the initial 19.19 cents. It also more than doubled the discount for one of its plans to 21 per cent. Apart from the chance of winning a free trip to Hong Kong, the first 100 customers who sign up before the end of this month will get S$80 off their third month’s bill. Customers who opt for e-billing also get S$1 off.
Commenting on the adjustments and wide variety of promotions, its general manager Geraldine Tan said: “This soft launch is for us to discover what works and what doesn’t for consumers. We monitor the market closely and if need be, we will introduce promotions and price changes.”
Over at Best Electricity Supply, cash rebates have been dished out on top of lowering the rate of its fixed-price plan to below 17 cents per kWh and increasing discounts for another plan.
“This is in response to the price cuts by other competitors,” said its general manager Terence Neo. “Jurong is only that big and there are 14 retailers. Competition is definitely heating up.”
Tuas Power Supply unveiled a six-month trial plan – a move that it said aims to “help consumers overcome the hurdle of trying something new”, according to its general manager Michael Wong.
“According to feedback, there are customers who are not comfortable with a long-term contract of one or two years so we came up with a six-month trial. With this, they don’t need to think too hard before taking the first step,” said Mr Wong.
But there are retailers who have chosen to stay put.
Mr Lawrence Kwan, vice president of energy at Sunseap, said prices of its clean energy plans “are already at their most competitive”.
“We don’t believe in having a price war because the premium is all about allowing Singaporeans to have access to clean energy and being environmentally responsible.”
SOME EARLY ADOPTERS, SOME PREFER TO WAIT AND SEE
For some residents, the discounts and freebies being dangled out have been a steal.
Mr Chang Chi Weng, 40, had set his sights on getting a fixed-price plan “to counter the uncertain market conditions” that sway the electricity tariffs charged by SP Group. Noting that the price cuts have brought all retailers to “roughly the same price point”, the engineer considered other factors, such as the ease of conversion and additional discounts, before deciding on PacificLight Energy.
“They were having a promotion of S$80 off my third month’s bill. That’s a practical thing that any consumer would consider,” said the resident of Jurong East.
Nonetheless, there are others who prefer to wait and see.
Ms Mabel Lee, who visited the EMA roadshow on Saturday, said the presence of 14 retailers and the buffet of price plans have been “overwhelming”.
“There are too many plans with different rates. You also need to look through the fine prints to see which ones require a security deposit or have hidden costs,” said the mother of three. “Even with the discounts, we still think we should do more research on our own so that we pick the correct plan and don’t lose out in the long term.”
There are also residents who remain clueless about the Open Electricity Market.
29-year-old Charmaine Teo said while she has seen posters about the soft launch, she knew little about it. “Maybe when more people sign up then I'll start thinking about it.”
Another Jurong East resident who preferred to be known as Mr Chua said he was more than happy to remain with SP Group as the new initiative “sounds complicated”. He also wondered if a change in retailer would affect his electricity supply.
To that, while retailers agreed there are still gaps in consumer awareness, almost all said they would not be too worried just yet.
Said Mr Jomar Eldoy, managing director of Ohm Energy: “Electricity is not something that most people pay attention to so it takes a while to realise that no matter who you buy from, the quality remains the same as the power grid continues to be operated by SP Group.”
“Market reach is a challenge as it takes some time for people to notice the change and when they do realise that they have the option of not just SP Group, they find themselves having to sieve through 14 retailers. But we believe that this deluge of information that’s keeping out some people is something that will solve by itself over time,” said iSwitch’s Mr Han.
Others, like Sembcorp Utilities, said it will continue to have roadshows in Jurong to “help educate” residents about the Open Electricity Market.
In response to queries, EMA said it is aware of questions that consumers may have, such as the reliability of electricity supply when they switch retailers, and have been addressing these concerns through its educational materials, such as information booklets and flyers.
“We will continue to refine and improve our public communications and consumer education efforts based on the feedback from the roadshow,” the spokesperson said.
FULL ROLL-OUT TO REST OF SINGAPORE
For the rest of Singapore, the full roll-out of the Open Electricity Market is slated for the second half of this year.
Most retailers participating in the soft launch told Channel NewsAsia that they have started preparing for that but still hope for some clarity soon. They also expect more players to enter the market in the upcoming months when that happens.
Agreeing, Mr Allan Loi, a research associate at the Energy Studies Institute at the National University of Singapore (NUS), noted that price cuts could intensify moving forward “as new entrants attempt to grab market share”.
But in the long run, retailers will need to differentiate themselves based on product and service innovation.
“If you look at the EMA website, there are 33 licensed retailers. Clearly, there are players that have not participated in the Jurong pilot scheme but could enter the market when the contestability is rolled out to the rest of Singapore,” said Mr Loi.
Raising the example of how there are more than 90 power suppliers in a smaller market like New Zealand, Mr Loi added: “How the Singapore market matures will depend on whether consumers are willing to embrace a lifestyle change in terms of energy use and how retailers market their plans moving forward. Instead of price, they will need to offer some sort of differentiated product for consumers.”