The document summarizes Singapore's electricity market reforms from 1995 to 2008. It outlines how the market was initially monopolized by the Public Utilities Board but was reformed to introduce competition through corporatizing the industry and separating generation, transmission, and retail. Key steps included establishing an independent regulator EMA, a market operator, and allowing new generation companies to enter. The reforms have led to downward pressure on electricity prices for consumers and incentives for companies to improve efficiency through cost-effective technologies and fuel usage.

1. Singapore’s Electricity
Market after Market Reform
David Tan
Deputy Chief Executive
Energy Market Authority

2. Agenda
• Timeline of Market Reform
• Regulatory Principles and Tensions
• Outcomes of Market Liberalisation

3. Before Liberalisation
• Public Utilities Board (PUB) has been the sole
provider of electricity in Singapore up to 1995.
• Infrastructure is built to meet forecasted demand.
• Upward pressure on prices has led the Government
to ask whether the industry is as efficient as it is, as
the electricity system continues to grow.
Competition through industry reforms would
encourage companies to be cost-efficient.

4. Industry Reforms (1)
• Electricity industry reforms started in 1995 –
electricity and gas undertakings of PUB corporatised
under Singapore Power. PUB remained the
regulatory body.
• Singapore Power was a vertically integrated power
company, owning the generation, transmission and
retail segments of the industry

5. Electricity Industry Structure in 1995
ENV Tuas SembCorp
Singapore Power Ltd IPPs
Power Ltd Cogen Pte
Senoko Power Ltd PowerSeraya Ltd Ltd
PP GT Senoko Jurong Seraya
PowerGrid Ltd
T&D System Pool
Operations Operations
since Apr 98
Power Supply Ltd Private Electricity
Non- Suppliers
Franchised franchised Utilities
Support Utilities Non-
Sector Sector Services Support franchised
Services Sector
Contestable Business
Non-contestable
Progressive Non-franchised Business
Franchised
extension of Consumers
Consumers competition

6. Industry Reforms (2)
• New power companies were not forthcoming in
investing in new plants, since Singapore Power
owns grid and generation.
• In 2000, Govt took further steps in industry reform:
separation of the natural monopolies (i.e. grid) from
the competitive domain (i.e. generation and retail)
• Grid remained under Singapore Power, while each
power plant was set up as a separate company to
compete with one another

7. Industry Reforms (3)
• EMA was formed in 2001 as the industry regulator
and power system operator.
• Energy Market Company became the market
operator.
• New generation companies came into operation:
SembCorp Cogen in 2001 and Keppel Merlimau
Cogen in 2007. Island Power Company is expected
to come into operation in 2010.

8. Electricity Industry Structure in April 2001
Senoko Power PowerSeraya ENV Tuas Power IPPs
Ltd Ltd (now NEA) Ltd
Energy Market Authority
of Singapore
Industry
Regulator
PowerGrid Ltd System
Operator
T&D
Singapore Power Ltd
Power Supply Ltd Electricity Market
(now SP Services Ltd) Retailers Operator
Energy Market
Company Pte Ltd
Franchised (Small) Market to be Non-franchised (Large
Consumers fully opened Industrial & Commercial)
ultimately Consumers
Electricity Flow

9. Key Electricity Licensees
Electricity Generation (8) Market Company
Senoko Power Ltd Energy Market Company Pte Ltd
PowerSeraya Ltd
Tuas Power Ltd Electricity Retail (6)
SembCorp Cogen Pte Ltd Keppel Electric Pte Ltd
National Environment Agency SembCorp Power Pte Ltd
Island Power Company Pte Ltd Tuas Power Supply Pte Ltd
Keppel Merlimau Cogen Pte Ltd Senoko Energy Supply Pte Ltd
Keppel Seghers Tuas Waste-To- Seraya Energy Pte Ltd
Energy Plant Pte Ltd
Island Power Supply Pte Ltd
Electricity Transmission
SP PowerAssets Ltd Market Support Services
SP PowerGrid Ltd (as agent to
SP Services Ltd
electricity transmission licensee)

10. Industry Reforms (4)
• National Electricity Market of Singapore (NEMS)
commenced operation in Jan 2003.
• Vesting Contracts was introduced in Jan 2004 to
curb vesting contracts.
• Interruptible Load Supply was introduced in 2004 –
consumers can offer to have their electricity supply
interrupted in exchange for payment from the
reserve market.

11. Industry Reforms (5) – Retail Contestability
Phase I Phase II Phase III
started started in Being studied
Jun 2003 Dec 2003
• HT consumers • LT consumers • Remaining one
with average million
• LT consumers consumers
monthly
with average
consumption • Electricity
monthly
exceeding Vending System
consumption
10,000 kWh
exceeding
20,000 kWh • Another 5,000
contestable
• About 5,000
consumers
consumers

12. Electricity Industry Structure in Jan 2003
PowerSenoko PowerSeraya ENV Tuas Power IPPs
Ltd Ltd Ltd
Energy Market Authority
of Singapore
Industry
Regulator
PowerGrid Ltd System
Operator
T&D
Singapore Power Ltd
SP Services Ltd Electricity Market
Retailers Operator
Energy Market
Company Pte Ltd
Franchised (Small) Market to be Non-franchised (Large
Consumers (1 mil) fully opened Industrial & Commercial)
ultimately Consumers (10,000)
Electricity Flow

13. Generation Statistics (2007)
Max System Demand 5,946 MW
Licensed Generation 12,330 MW
Capacity
Energy Generated 41,138 GWh
System Gross ~ 44%
Efficiency
System Losses ~ 9%
Generation by Fuel Fix
Fuel Oil 18%
Natural Gas 79%
Others (Incineration, 3%
etc.)

14. Regulatory Principles (1)
• A good regulatory regime is essential for the free
market to function efficiently.
• Key regulatory objectives :
a) a level playing field
b) transparent rules and consistent application of
rules.
c) open access
d) low entry and exit barriers
• “The most expensive electricity is no electricity”
Electricity price should be an outcome of a properly
functioning market.

15. Regulatory Principles (2)
Key market principles:
a) Champion competition, not companies and allow
market outcomes to be expressed.
b) Market to drive investments, allow entry or exit of
new competitors/products into the market
c) Market to incentivise most cost efficient behaviour
d) Market sets electricity price
e) No distortions from subsidies, causer-pays
principle
Price regulate monopolies (the Grid) in a way to
incentivise the companies to be cost efficient.

16. Regulatory Tensions (1)
• One outcome of competition is to cause companies
to adopt the most cost efficient technology –
Combined Cycle Gas Turbines (CCGTs).
• The reliance on gas has thrown up some dilemmas.
• Do we need a fuel mix for security? Should we
determine the fuel mix to be used or should we
leave it to the market to determine what mix of fuel
to be used?

17. Global fuel mix is much more diverse than S’pore
Global Electricity Fuel Mix (2004) Singapore Electricity Fuel Mix
Waste (2006)
Geotherm
0.4% Others
al Refuse
0.5%
Hydro 0.3% 2.4% Diesel
16.5% 0.1%
Orimulsi
Coal on
39.6% 6.9%
Natural
Nuclear Gas
SynGas
15.6% 77.8%
0.9%
Biomass
0.9% Fuel Oil
11.9%
Gas Oil
19.5% 6.7%
Source: IEA, EMA

18. 0%
20%
40%
60%
80%
100%
South Africa
Australia
Source: IEA, EMA
Israel
Hong Kong
Taiwan
Coal
USA
Germany
Hydro
Denmark
Indonesia
Oil
South Korea
North Korea
Gas
UK
Ireland
Nuclear
Philippines
Malaysia
Finland
Japan
Renewables
Netherlands
International Comparison
Russia
New Zealand
France
Norway
Switzerland
Singapore

19. Regulatory Tensions (2)
• We were dependent on oil for a long time. But the
well developed global markets for oil helped to
ensure that there is always a supplier to buy from –
even during the oil embargo in the 1970s, we were
able to secure fuel.
• Gas enables 2 levels of diversification – gas turbines
can be fired by diesel which is stockpiled and the
LNG terminal which is being planned will enable
source diversification.

20. Regulatory Tensions (3)
• Fuel diversification occurs in large countries and
usually in countries which have indigenous sources
of energy and is usually an outcome of economic
viability.
• Without adequate economies of scale with each type
of fuel used and without the circumstances to render
the use of each type of fuel viable, fuel diversification
can be a very expensive option.
• We are technology neutral and will be an enabler for
what the market decides.

21. Outcomes of Market Liberalisation (1)
Downward pressure of electricity prices
• By 2007, about 10,000 accounts representing 75%
of electricity consumed in Singapore are
contestable.
• EMA is exploring how to leverage on technology
(Electricity Vending System) to extend contestability
to the rest of about 1 million domestic consumers
• Evident in the rise in electricity tariffs which is
significantly smaller than rise in fuel oil price

22. Electricity Tariff vs Fuel Oil Price
96.64
100 100
Fuel Oil Prices (S$) vs Low Tension Tariff 87.49 88.52 87.46
90 90
80.96 81.23
77.45
80 75.73 80
72.71
70 64.87 65.25 70
Fuel Oil Prices (S$/bbl)
Tariff (¢/kWh)
60 52.40
60
50.15 49.22
47.79
50 45.66 50
42.84 42.42 43.06 43.34 43.12 44.56 44.56
38.30 37.18 37.18
40 40
32.1332.13
30 22.62 30
21.15 21.64 20.02 20.52 21.38
19.87 18.26 19.57 21.02 20.49 18.88
17.21 17.21 17.81 16.56
20 15.0215.02 16.01 16.51 15.24 15.81 15.44 15.8 15.8 16.53 16.73 16.06 20
10 Pegged Fuel Price LT Tariff 10
0 0
Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan-
01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08
• Fuel oil price has increased by 152%
• The electricity tariff for households has however increased by 14%
• This is largely due to efficiencies gains in the industry, such as utilizing
more cost-efficient technologies for electricity production.

23. CO2 Generated in kg/MWh in Year 2000 and 2007
•
Source: CARMA
30% reduction in Carbon Dioxide Generated in kg/MWh

24. Outcomes of Market Liberalisation (2)
Companies are incentivised to:
a) reduce costs (sourcing for cheaper fuel);
b) lower costs of risks (hedge against volatility in fuel
oil price);
c) adopt the most cost competitive technology (switch
from steam plants to CCGTs),
d) develop market demand and improve efficiency
(adopting combined heat and power plants eg co-
gen and tri-gen).
• On the whole, market reforms have increased
competition among industry players and benefited
consumers.