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Singapore's largest independent electricity retailer iSwitch bows out

Singapore's largest independent electricity retailer iSwitch bows out

Source: Business Times
Article Date: 14 Oct 2021
Author: Anita Gabriel

The news comes as a big shock as iSwitch was widely deemed as a solid and nimble player in the retail market.

In what marks a big blow to Singapore's liberalisation of the power sector, iSwitch Energy, the city-state's largest independent electricity retailer, has decided to bow out from retail operations from next month.

The retailer cited the current market conditions behind the decision to cease its retail operations on Nov 11.

In a note to consumers, it said: "Over the past 6 years, iSwitch has had the privilege of serving the Singapore electricity market and collectively saving consumers over S$150 million on their energy bills against the SP tariffs. We have also helped maintain focus on sustainability and the green goals... Unfortunately, due to current electricity market conditions, we will be ceasing our electricity retail operations on Nov 11."

One market watcher remarked: "From hero to zero. What a shame."

iSwitch, Singapore's fourth-largest electricity retailer, has garnered a market share of some 13.1 per cent of Singapore's Open Electricity Market (OEM) as of end-April this year. RCMA, a unit of global commodity house RCMA Group, is the parent company of iSwitch - one of Singapore's 12 electricity retailers.

The news comes as a big shock as iSwitch was widely deemed as a solid and nimble player in the retail market. In the early months of Singapore's liberalisation, the green energy retailer scooped up another retailer ES Power's contracts worth S$15 million and has grown its market share steadily.

Household accounts currently held under iSwitch will be transferred to SP Group with effect Nov 12. They can also choose to switch to another retailer before the transfer to SP Group. No contract termination fees will be charged.

Still, market watchers expect tens of thousands, if not more, of residential consumers who are impacted by iSwitch's move, to contend with higher power bills. That is because extraordinary spikes in spot electricity prices - an anomaly that has recurred several times since July - have prompted Singapore's electricity retailers to pass the buck to new household customers across the board by raising the prices of fixed-price plans under OEM to cushion the hit on business margins.

A check by The Business Times last month revealed that retailers have raised fixed-price plans - be it for 6, 12, 24 months or more - by 10-20 per cent in August and September versus June, before the wild swings in spot electricity prices.

In July, the Uniform Singapore Energy Price (USEP), which varies half-hourly depending on demand-supply conditions in Singapore's wholesale market, shot through the roof and hit a multi-year high of S$1,514.86 per MWh (megawatt-hour).

The sustained high prices over two days pushed up July's average USEP to S$167.04 per MWh, a level not seen in six years, according to an earlier report by BT.

The USEP skyrocketed again last month (on Sep 23), this time to as high as S$2,036.02 per MWh - another fresh record in eight years. On that day too, the supply cushion in the wholesale electricity market reached a low of 11 per cent. Anything below 20 per cent signifies tight supply conditions.

"This has been the most volatile period in the history of the electricity spot market," said a key executive of an electricity retailer.

The staggering spikes that have confounded industry players appear far from over.

On Tuesday, the USEP peaked at S$3,008 per MWh as the supply cushion reached a low of 10.9 per cent, indicating tight supply conditions in the market. At the daily level, the USEP averaged S$1,597 per MWh that day. This is the highest daily level since the start of the National Electricity Market of Singapore (NEMS) in 2003, the Energy Market Company's senior vice-president of markets and operations Henry Gan told BT. The second highest daily USEP registered was S$997/MWh on 26 Nov 2012.

(Under the Singapore Electricity Market Rules which govern the NEMS' operations, a price cap of S$4,500 per MWh is in place for the USEP. This ensures that the USEP will never exceed that level regardless of prevailing market conditions).

The city-state's OEM that was launched three years ago with a bang, involves some 1.3 million household accounts and 67,000 small business accounts. Spoilt for choice with the promise of cheaper power bills of up to 30 per cent, one out of two households have since switched out of SP Services - the incumbent supplier pre-liberalisation.

"It feels like we have given back everything we have worked so hard for over the past three years. It's a pity," said the executive. The market is fearing more casualties ahead.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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