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Are you buying electricity in Singapore? Avoid these common mistakes…

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The Open Electricity Market in Singapore gives all end users a choice of who to buy their power from. Sounds like a simple price comparison is in order – right? Well it isn’t that simple and unless you are an electricity market expert you may be spending thousands of dollars more than you need to be. Here are the common mistakes made when deciding on a new electricity contract.

Reliance on price comparison websites

Price comparison websites are great if you are a domestic customer or small business user. However larger users need tailored pricing and tailored solutions. You can use your load size to your advantage with direct negotiation.

Not understanding the options

There are more than just fixed price or discount of tariff contract options. These are by far the most common, but electricity retailers have a suite of other contracts that could save you up to 50% off the regulated tariff. The retailers don’t often advertise these options as they make more money from the standard contracts and customers don’t always understand the more complex pricing structures. Knowing what options are available can help you choose one with the best risk profile for your business.

Re-contracting according to your contract expiry date

The standard procurement approach to purchasing electricity is to wait until the contract expiry date is approaching and go to market then. But electricity prices can be quite volatile and keeping an eye on the market and contracting during lower price periods can save you thousands of dollars.

Not negotiating after first round offers

There is always room for negotiation, and if you don’t ask you don’t receive. You may prefer one retailers’ contract structure and anothers’ price so don’t just accept the first offer as the only offer.

Supplier loyalty 

In new markets there can be fear that entering contracts with new players are riskier to go with, but the Energy Market Authority does a thorough due diligence check for all retailer suppliers before they issue a retail license. Some of the better pricing options come from the new market players as they have experience from other, more established electricity markets around the world.

Fear of supply disruption when changing retailer

If you change retailer there are no physical changes to the way electricity is delivered to your business. The Energy Market Authority manages the physical electricity network and ensures that supply meets demand. The meter reading is managed by SP Services. Changing retailer simply means that SP send your meter data to the new retailer for billing purposes. It is up to the retailer to manage the price that they buy and sell the power at – this is all done via the financial markets and has nothing to do with the physical delivery of power to your premises. 

Not being ready to sign when the contract is ready

Delays in signing the retail contract can get very expensive. The oil price is often used as a reference point for price validity, and as we have seen recently the oil prices have been changing rapidly on a daily basis. Once the final retail offers are in and you like the contract price and the structure then you must be ready to execute the contract before the price becomes invalid.

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What is the Open Electricity Market in Singapore?

The Open Electricity Market in Singapore gives all end users a choice of who to buy their power from, rather than being tied to a single default provider.

Why shouldn't larger electricity users rely on price comparison websites in Singapore?

Price comparison websites are great for domestic customers or small business users, but larger users need tailored pricing and tailored solutions and can use their load size to their advantage through direct negotiation instead.

What contract options exist besides fixed price or discount of tariff contracts?

Fixed price and discount of tariff contracts are the most common, but electricity retailers offer a suite of other contract options that could save businesses up to 50% off the regulated tariff. Retailers don't often advertise these because they make more money from standard contracts and customers don't always understand the more complex pricing structures.

What is wrong with re-contracting only when your electricity contract is about to expire?

The standard approach of waiting until the contract expiry date approaches before going to market can be costly, because electricity prices can be quite volatile. Keeping an eye on the market and contracting during lower price periods can save thousands of dollars.

Should you accept the first electricity contract offer you receive in Singapore?

No — there is always room for negotiation, and if you don't ask you don't receive. You may prefer one retailer's contract structure and another's price, so the first offer should not be treated as the only offer.

Is it riskier to choose a new electricity retailer over an established one in Singapore?

Not necessarily. The Energy Market Authority conducts a thorough due diligence check on all retailer suppliers before issuing a retail license, and some of the better pricing options come from newer market players who bring experience from other, more established electricity markets around the world.

Will changing electricity retailers disrupt the physical power supply to a business in Singapore?

No. Changing retailer does not physically change how electricity is delivered. The Energy Market Authority manages the physical electricity network and ensures supply meets demand, while SP Services manages meter reading. Changing retailer just means SP sends your meter data to the new retailer for billing; the retailer's role is limited to managing the price at which they buy and sell power via the financial markets.

Why is it important to be ready to sign an electricity contract quickly once terms are agreed?

Delays in signing can get very expensive because the oil price is often used as a reference point for price validity, and oil prices can change rapidly on a daily basis. Once the final retail offer's price and structure are acceptable, the contract must be executed before the price becomes invalid.

Who wrote this article and what is their background?

The article's author profile (Northmore Gordon) is attributed to Craig, a mechanical engineer with 30 years' experience, including more than fifteen years assisting organisations manage energy, greenhouse gas emissions, and climate change impacts, with seven years focused on energy management and greenhouse gas inventory development and six years on renewable energy generation systems.

When was this article about buying electricity in Singapore published?

The article was published on June 30, 2020, and is categorized under 'Articles' with tags including electricity, Energy Market, Procurement, and Singapore.

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