Electricity Retail Contracts: Enhanced Protection and More Options for Households and Small Businesses

19 February 2018

Sandra Seah, Jonathan Kao

The liberalisation of Singapore's electricity market paves the way for flexibility and empowers consumers in their choice for electricity consumption. Households are expected to save between 10% to 30% of their annual electricity bills from buying electricity from a retailer with a price plan that best meets their needs and switching away from regulated tariff contacts with SP Services.

Current regulatory requirements for retail contracts

Currently, only businesses consuming electricity above 2,000 kWh a month (also known as “contestable consumers”) are free to choose which electricity retailer to buy from and enjoy savings on their electricity bills. 

Open Electricity Market

In the second half of 2018, all consumers in Singapore, including households and small businesses, will be able to choose their electricity retail provider. With the introduction of Open Electricity Market (OEM), previously referred to as Full Retail Competition (FRC), the retail electricity market is opened to competition where consumers will be allowed to have the choice in buying electricity from a designated retail electricity provider. Said consumers comprise of (a) small business consumers with average monthly consumption of less than 2,000 kWh and (b) residential consumers. There are currently 27 licensed retailers; with more expected this year.

Consumers can participate in the contestable market, instead of remaining on the regulated tariff with Singapore Power (SP). SP will continue to provide metering, billing services and acting as the default supplier for the consumers. In deciding whether to switch towards retail choices or to remain on the regulated tariff with SP, consumers in Singapore may be averse to the switch due to the unfamiliarity and lack of experience in retail choice for electricity. 

Consumer Protection in Retail Contracts

The Code of Conduct for Retail Electricity Licensees (the “Code”) provides robust consumer protection by subjecting retail electricity licensees to comply with the Code. As a consumer, having an understanding of the expectations your chosen electricity retailer must adhere to allows you to align your interests with them, as well as an awareness on key information when comparing retailers. Guidance may be found in the following modifications proposed to amend the Code for enhanced consumer protection:

Marketing

All standard price plans shall be published on EMA’s designated Price Comparison Website to facilitate comparison by all consumers. In addition, key information that residential consumers shall be aware about can be found in the prescribed Fact Sheet.

Note: A standard price plan refers to any price plan that charges the consumer for electricity based on a (i) fixed price, (ii) discount-off prevailing regulated tariff, or (iii) peak and off-peak prices.

Contractual Terms

Consumers shall take note of the key terms and conditions for discussion in a retail contract prior to contracting with retailers. Such key terms include Pricing information, Applicable charges (e.g. early termination charges, late payment fees, treatment for overcharging/undercharging). In regards to bundled products/services, rates applicable must be distinguished between the provision of (i) electricity services and (ii) non- electricity services (if any), including apportionment of any Security Deposit and any early termination charges.

Other key terms to note include: Amount of security deposit, Treatment of outstanding/credit balance, Treatment of U-Save rebates, Dispute resolution procedure, Contract start and end date, Retailer’s contact information, and Notification lead time for contract expiry/renewal.

Contract termination initiated by retailer (i.e. involuntary termination due to arrears)

The consumer shall be informed at least 10 business days in advance of any upcoming contract termination. In the event where the consumer himself fails to inform the retailer of his termination, the retailer is likely to transfer them to SP Group to resume their purchase of electricity via the default supply arrangement i.e. regulated tariff for small consumers, and wholesale electricity for large consumer.

Charges relating to termination

To deter consumers from early termination of their retail contracts, retailers may impose such charges if the termination is due to a breach of the contracts by the consumers, or (b) by the consumers at their convenience.

Dispute Resolution

The retailer shall not waive household’s right to seek alternative dispute resolution including mediation. Instead, the retailer is expected to facilitate resolution of disputes under the relevant retail contract or pertaining to services provided by SP Group.

Contract expiry or renewal

Upon contract expiry or renewal, the consumer shall be informed as such and to be notified at least 10 business days in advance. The retail contract shall state the supply arrangement upon contract expiry or renewal.

Security Deposits & Prepayment Plans

Any security deposit collected from each household shall not exceed 2 times of his average monthly electricity bill. Within 1 month from the settlement of the last electricity invoice, any security deposit or credit balance amount shall be refunded to the consumer. Further, to ensure reasonable prepayment, any contract which involves the prepayment of electricity services by a retailer must receive a prior written approval by EMA.

In addition, to facilitate the switching process and for consumers to make an informed decision in choosing an electricity retailer that suits their needs, Electrify.sg has an interactive online portal to help consumers in their purchase for electricity with the comparison of electricity price plans and services (electrify.sg). SP Services has also set up an online portal (openelectricitymarket.sg) to provide updates and information on Singapore’s electricity market.

While switching to a new service provider and pricing plan may lead to sizeable energy and price savings (in addition to host benefits for consumers), consumers must exercise care and discretion in making their choice by understanding the practical implications of the various aspects in their retail contract.

This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. Please contact our lawyers if you have any specific queries.

Authors

Kao-Jonathan

Jonathan Kao

Associate
Singapore

Call me on: +65 6534 5266
Seah-Sandra

Sandra Seah

Joint Managing Partner
Singapore

Call me on: +65 6534 5266