EMA consults on enhancements to regulatory regime for electricity retailers

27 February 2023

From 1 February 2023 to 3 March 2023, the Energy Market Authority (“EMA”) is conducting a public consultation on proposed enhancements to the regulatory regime for electricity retailers. The proposed enhancements seek to strengthen the resiliency of all retailers, in particular their ability to withstand market volatility to safeguard the relative stability of the retail market.

EMA proposes to introduce the following four measures to enhance the regulatory regime for electricity retailers:

  • Paid-up capital requirement for all retailers: To ensure that electricity retailers are credible and have sufficient financial standing, EMA proposes to additionally require all retailers to have a paid-up capital (PUC) or Tangible Net Worth (TNW) of at least S$1 million.
  • Retailers will be required to seek EMA’s approval to appoint key appointment holders: To ensure that electricity retailers are headed by competent and honest individuals, EMA proposes to require all retailers to seek EMA’s approval to appoint key appointment holders (“KAHs”). KAHs include the company’s (a) ACRA-registered director(s), (b) Chief Executive Officer (“CEO”)/Managing Director (“MD”), and (c) personnel who directly report to the CEO/MD, or any person who has substantial direct or indirect influence over the key decisions of the company. All licence applicants will be required to comply with this requirement. Existing licensees will be required to comply with this requirement for any change in KAH when the requirement comes into effect. This requirement will be imposed via the Code of Conduct for Retail Electricity Licensees (“Code of Conduct”), and employing KAHs without EMA’s approval will constitute a breach of licence conditions.
  • Raise hedging requirements for all retailers: To increase the resilience of retailers during periods of market volatility, EMA proposes to require all retailers to hedge at least 80% of their retail contract quantity on a rolling 24-month forward basis and provide a performance bond to cover their projected residual unhedged quantities (which should not be more than 20% of total retail contract quantity).
  • Enhance consumer protection against premature termination of contracts by retailers: To strengthen consumer protection against premature termination of retail contracts, EMA intends to amend the Code of Conduct to clarify that the retailer is not permitted to unilaterally terminate the contract as long as there is no payment or contractual default even if the consumer is insolvent, bankrupt or deceased. Retailers will also be required to impose early termination charges on consumers to compensate consumers in the event of early termination. The compensation provided for early termination must be at least as much as the penalties levied on consumers for early termination.

EMA is considering whether retailers should be required to compensate consumers for the positive difference between the consumers’ existing contract and applicable default supply arrangement for the remaining tenure, should the retailer exit the market.

Reference materials

The following materials are available on the EMA website www.ema.gov.sg and the REACH website www.reach.gov.sg: