Guide To Choosing Open Electricity Market Plan For Your Home

5-Minute Explanation: How Electricity Is Produced And Sold In Singapore

In order to understand what an electricity retailer is, we first need to understand how electricity is produced and sold in Singapore. The Singapore energy market has always been an eco-system made up of multiple players.

Everything starts with the electricity produced by power plants, which are owned and operated by power generation companies. Every half an hour, these companies bid for contracts to generate and sell specified quantities of power on the wholesale electricity market. Retailers, including SP Group, then buy electricity in bulk from the wholesale electricity market to supply to consumers.

The electricity generated is then transmitted from the power plants and distributed across the island on the national power grid, which is also operated by SP Group.

In other words, SP Group buys electricity in bulk from the power generation companies on behalf of Singapore households, is responsible for the infrastructure for reliable power delivery island-wide, and bills households for electricity consumed.

To ensure consumers are protected, prices that Singapore households pay is based on the tariff set by the Energy Market Authority (EMA), with the aim of being as low as possible while allowing SP Group to cover operational costs.

The tariff is revised every quarter and consists of two parts: 1) fuel cost and 2) non-fuel cost. The fuel component is based on natural gas prices in the preceding quarter, while the non-fuel component covers the cost of running the electrical infrastructure and support services like meter reading.

In effect, the tariff system insulates Singaporeans, to some extent, from the electricity production and purchase process, and from near-term price fluctuations due to the global oil market, since 95% of Singapore’s electricity supply is generated using imported natural gas.

What Is The Open Electricity Market (OEM)?

The Open Electricity Market (OEM) is part of EMA’s effort to liberalise the electricity market, allowing residential households in Singapore to buy electricity from retailers other than SP Group.

Think of this as similar to how different telecommunication companies in Singapore such as SingTel, M1, Starhub and Circles.Life offer different price plans in order to attract different kinds of customers.

On 1 April 2018, OEM was soft launched, allowing more than 100,000 Jurong households to choose their electricity retailer and plan. The OEM will be rolled out nationwide in phases from 1 November 2018. This will involve 1.3 million mostly household accounts.

To be clear, SP Group continues to operate the national power grid, so you can be assured of the same reliable power that you come to expect living in Singapore. For those who choose not to do anything, SP Power will continue to sell you electricity at the regulated tariff.

Here is the current list of electricity retailers that you’ll be able to buy electricity from:

Best Electricity Supply
ES Power by Environmental Solutions (Asia)
Geneco by Seraya Energy
iSwitch
Keppel Electric
Ohm Energy
PacificLight Energy
Sembcorp Power
Senoko Energy Supply
SingNet (OEM section not yet available)
Tuas Power Supply
Union Power

When Will You Be Able To Make The Switch?

The nationwide roll-out of the Open Electricity Market will be conducted in phases, based on location.

Overview Of Types Of Price Plans Offered By OEM Retailers

Before we compare the different standard price plans offered by each retailer, it’s important to first understand how each works. In general, retailers offer two types of plans: 1) Discount Off Regulated Tariff, 2) Fixed Price.

Here is how each type of electricity plan works.

1) Discount Off Regulated Tariff plans offer a discount off the prevailing regulated tariff price, which is revised every quarter.

Source: Energy Market Authority

2) Fixed Price plans mean you pay a fixed rate throughout the duration of your contract. While the rate is not subject to quarterly fluctuations based on the tariff, it may be higher or lower than the tariff over time.

Source: Energy Market Authority

Peak and Off–Peak plans were offered to Jurong residents, but is likely to be withdrawn when the OEM rolls out nationwide, due to the lack of interest among consumers. Retailers could still offer Peak and Off-Peak plans, but these will be classified as “Non-Standard plans”.

Under this scheme, you pay different prices for electricity usage depending on the time of day. If your household’s electricity usage is skewed towards mainly off-peak hours, Peak and Off-Peak plans could potentially result in the greatest savings.

Best Discount Off Regulated Tariff Plans Across OEM Retailers

* All prices are accurate at the time of writing and might be subject to change. Please contact individual retailers for the most updated pricing.

There are currently a total of 20 Discount Off Regulated Tariff Plans offered by the various retailers. Here are the various plans compared:

Note that ES Power, Singtel and Union Power have not released their plans yet.

As you can see, Geneco’s Give Us A Try (6 months) plan offers the highest percentage discount off the regulated tariff at 23.80% (as of 30 September 2018). However, the short contract duration can be seen as a double-edged sword.

On the one hand, it frees you up to choose another cheaper plan or even switch to another retailer after 6 months. On the flip side, the discount being offered may not be the same by the time you need to re-contract.

If you want to lock in the percentage of discount off the tariff price, the next best deal (as of 30 September 2018) is Sembcorp Power’s 24M Discount Off Tariff Home plan which provides a very attractive 23.50% discount off the regulated tariff over a period of 24 months.

Best Fixed Price Plans Across OEM Retailers

As of 30 September 2018, there are 20 Fixed Price plans available, which you can compare below:

The absolute cheapest rate (as of 30 September 2018), would be Geneco’s Get It Fixed 24 plan, which is at 15.99 cents/kWh for a 24-month contract.

For those who prefer a shorter tenure, the best 6-month Fixed Price plan (as of 30 September 2018) is Best Electricity Supply’s BEST Home Fixed 6 months, which offers a rate of 16.28 cents/kWh.

Best OEM Peak And Off-Peak Plan Across OEM Retailers

Comparing between the 6 Peak and Off-Peak plans is a little trickier, since not all vendors have the same definition of the “peak period”. Thus, there isn’t a definitive way to say which is the “best” plan.

While Peak and Off-Peak plans are currently offered on the retailers’ websites, EMA has said that these plans are not going to be offered as standard plans in future.

Choosing The Best OEM Retailer And Plan For Your Household

Now that you understand how the various plans work, you might wonder which one suits you best. Here are four steps you can take to answer that question.

Step 1: Examine Your Household Electricity Bill

The first thing you can do is to gather your past electricity bills. Since electricity consumption is generally cyclical, doing so will help you have a more accurate picture of your consumption patterns.

When going through your household electricity bills, note the highest electricity usage in a month, and then calculate the average monthly electricity consumed.

You can use the following table to log your results.

Step 2: Calculate Expected Costs

To help you along, you can also refer to information on historical tariff rates and compare against the rates on offer.

Source: SP Group

The Current Regulated Tariff is 24.13 cents/kWh (effective from 1 October to 31 December 2018)

• Highest tariff in past 24 months: 24.13 cents/kWh
• Lowest tariff in past 24 months: 20.20 cents/kWh
• Average tariff in past 24 months: 21.76 cents/kWh

Take your average monthly electricity consumption (derived in Step 1) and multiply that with rates given by the Fixed Price plan that you are considering. This is how much you can expect to pay when you’re on a Fixed Price plan.

Expected Fixed Rate Bill = Electricity Consumed x Fixed Rate Cost (per kWh)

Adding a column to your original table, you can see if you will be making savings (and by how much).

To know how much you’ll be paying if you are on a Discount Off Regulated Tariff plan, look at what you are currently paying for your electricity (which is at the regulated tariff) and factor in the discount percentage given in the plan.

Expected Discount Off Tariff Bill = Electricity Bill – (Electricity Bill x Discount Off Tariff Percentage)

Adding a column to your original table, you can see how much savings in dollar terms you would have made.

Using the results of both Fixed Price and Discount Off Regulated Tariff tables, you can see which type of plan will result in the greatest savings for your household.

If you’re worried about making the “wrong” decision, then the simple sure-win proposition is to go for a Discount Off Regulated Tariff plan. By switching to a retailer with such a plan, you will enjoy immediate savings compared to sticking with SP Group.

Step 3: Read The Fine Print

After you identified the best plan, you can visit the retailer’s website and download the Fact Sheet for the plan (or plans) that you have in mind. This Fact Sheet will summarise the key contractual terms and conditions of the price plan, such as contract duration, payment terms, security deposit, early termination charges and auto-renewal clauses.

Another document to look out for is the Consumer Advisory which outlines the important things that you should be aware of before signing up with a retailer. Retailers are required to obtain your acknowledgement before contracting you as their customer. For most of the plans, there is usually a security deposit required, and there are early termination and late payment fees you need to be aware of.

As with all contracts, read the fine print carefully and ask the retailer to explain any of the terms and conditions that you are unsure of.

Step 4: Look For Discounts And Promotions

In a bid to attract new customers, retailers have been offering referral discounts and other perks. Some of these are limited-time or limited-quantity offers, and they should not be the driving factor for deciding to sign with a particular retailer.

Ultimately, choosing your electricity retailer and plan is an important decision that you should make based on your needs.

This article is republished with permission from Dollars and Sense.