CSQ2 iSwitch shutting down

The prospect of surging energy prices for the next few years amid volatile conditions are what spurred the departure of two retailers from Singapore's open electricity market (OEM), experts said. Of the 10 remaining retailers, at least two others are set for the exit door. Singapore's fourth-largest retailer iSwitch, as well as Ohm Energy, announced their departures from the market just days apart. Ohm Energy on Oct 15 informed customers it was exiting the market effective the same day due to "a volatile electricity market" rendering its prices unsustainable.

An e-mail to an existing Diamond Electric customer seen by The Straits Times cited "increasing costs of electricity" for the discontinuation of a similar plan.

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Earlier this month, Trade and Industry Minister Gan Kim Yong cautioned that fuel prices have more than doubled over the past 18 months, and as an island state that imports almost all its energy, Singapore is inevitably affected by global turbulence. This year, Singapore is facing “a perfect storm” of soaring energy prices induced by shortages in fossil fuel production, triggered by under-investment in energy projects and exacerbated by the Ukraine war, as well as severe disruptions in renewable power around the world.

Business lecturer Tan Tsiat Siong from the Singapore University of Social Sciences said, "Retailers offering fixed price plans are promising to sell electricity at a cheap price - and sometimes in large volume - without sufficiently ensuring that they would be able to purchase this electricity at low prices." However, observers said independent retailers also had to compete in a saturated Singapore market - with 12 retailers for 1.4 million residential households - and for some of them, at the disadvantage of not having their own power generation assets.

Continued competition, for one, would still bring about benefits such as improved service quality, greater choice of customized product offerings and overall lower prices.

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Mr Sharad Somani, KPMG Singapore partner and the head of infrastructure advisory, called on industry regulator Energy Market Authority to review the appropriate number of retailers for a competitive yet financially and commercially sustainable retail market space. As for retailers, he noted that in some other countries, they are known to go beyond electricity to provide anything from energy management solutions to broadband and heating. These additional offerings improve the stickiness of their customer base and increase revenue per customer.

Said Mr Somani: "Retailers will need to reinvent their business model and offer more value-added and diverse services to stay relevant, competitive and profitable in the long term."