Ms Sylvia Lim asked the Minister for Trade and Industry (a) what is the Ministry’s updated assessment of the energy supply situation in Singapore for the rest of 2022, in the light of global competition for limited supplies of liquefied natural gas; and (b) whether the Government will consider any further measures to manage the affordability of electricity costs to businesses and consumers for the period.
Mr Gan Kim Yong: This reply also addresses a question by Mr Yip Hon Weng scheduled for a subsequent sitting.
The world has been facing an energy crunch since September 2021. Global gas prices have increased significantly due to high demand and tight gas supply. The global energy markets are expected to remain volatile and elevated with the protracted conflict in Ukraine coupled with the seasonal increase in energy demand from countries in Europe and Asia during the coming winter.
With Singapore relying on imported natural gas to generate around 95% of its electricity, our domestic energy prices would not be immune from the volatility in global energy markets. Higher fuel prices globally will result in higher domestic electricity prices. While our electricity prices will have to reflect the higher cost of electricity production, it is vital that the global volatility does not disrupt our electricity supply and impair the functioning of our domestic energy market.
I previously shared with the House measures that MTI and EMA have put in place since October 2021 to secure our electricity supply and ensure the orderly functioning of the wider energy sector. Specifically, EMA established a Standby LNG Facility (SLF), which generation companies (gencos) can draw from to generate electricity when their natural gas supplies are disrupted. We also required gencos to bolster their own stockpile of fuel. Where there are potential shortages in electricity supply, EMA will also direct the gencos to generate.
These measures helped to ensure uninterrupted energy supply and stabilised the Uniform Singapore Energy Price (USEP), without the need to bring the electricity market under state control within the short to medium term. Our Uniform Singapore Energy Price (USEP) stablised to around $320/MWh for the first six months in 2022, versus $440/MWh in 4Q 2021.
Members may recall that some businesses could not get electricity contracts towards the end of last year and the beginning of this year. In response, EMA introduced the Temporary Electricity Contracting Support (TRECS) Scheme to help large consumers secure retail contracts. Sembcorp Power and Keppel Electric will continue to offer longer-term fixed price plans for consumers with average monthly consumption from four to 50 Megawatt-hour (MWh). The demand for TRECS has been steadily decreasing, indicating that consumers are now able to secure longer term retail contracts if they want to.
In view of the continuing uncertainty in the global energy market, EMA has extended these measures until 31 March 2023.
The Government will also continue to help consumers cope with the higher costs of electricity, especially the more vulnerable ones. The support measures introduced in Budget 2022 will help eligible households with double the quantum of their quarterly GST Voucher (GSTV) U-Save vouchers in FY2022 to defray the costs of higher electricity bills. This amounts to about 8 to10 months’ worth of utility bills for the average household living in 1- to 2-room HDB flats, and about 4 to 6 months’ worth of utility bills for the average household living in 3- to 4-room HDB flats, as compared to FY2021, where we disbursed 4.5 to 6 months’ of utilities bills rebates for households living in 1- to 2-room HDB flats, and 1.5 to 3 months’ of utilities bills rebates for households living in 3- to 4-room HDB flats. The GSTV U-Save rebates will be distributed in April, July, October 2022, and January 2023. As part of the $1.5 billion Support Package announced in June 2022, all Singaporean households will also receive additional $100 of Household Utilities Credit by September 2022. We are also helping SMEs that are energy intensive, such as those in the food services, food manufacturing and retail industries, to save electricity through the Energy Efficiency Grant.
The global energy crunch is likely to continue and may even intensify as we head into the Northern Hemisphere winter months. The Government will do all it can to ensure that our electricity supply remains resilient. We hope that all consumers can help us in this endeavour by conserving energy where they can.
Ministry of Trade and Industry
1 August 2022