Proposed Amendments to the Energy Market Authority of Singapore Act, Electricity Act, and Gas Act

Ministry of Trade and Industry (MTI) and the Energy Market Authority (EMA)

Consultation Period: 08 May 2024 - 05 Jun 2024

Status: Closed - Summary of Responses

Consultation Outcome

Summary of Feedback Received from the Public Consultation on Proposed Legislative Amendments to the Energy Market Authority of Singapore Act, Electricity Act, and Gas Act

1. To achieve Singapore’s 2050 net-zero ambitions, we need to decarbonise the power sector while ensuring energy security and cost competitiveness. The Ministry of Trade and Industry (MTI) and Energy Market Authority (EMA) have therefore proposed legislative amendments to enhance our regulatory regime for energy markets and related infrastructure.

2. MTI and EMA released a consultation paper to seek views from the industry and public on these proposals from 8 May to 5 June 2024 and received about 30 responses. Most respondents sought clarification on the scope of the proposed legislative amendments. MTI and EMA appreciate the feedback provided and have outlined our responses below.

Key Comments and Our Responses

Proposal to Establish Regulatory Regime for Centralised Gas Procurement

3. Respondents asked about the scope of the requirement to procure gas from the Central Gas Entity (CGE) and shared their views about the potential loss of flexibility to procure gas from other market participants. Respondents also asked about the CGE’s pricing and procurement approach and requested for more information on the CGE’s performance benchmarks.

4. The centralised gas procurement regime will apply to gas users from the power sector (e.g. generation companies). Non-power sector consumers (e.g. industrial gas users) will be excluded from this regime, and EMA is reviewing the request to also exempt Embedded Generators from this requirement. In addition, legacy gas contracts will not be affected by the new regulatory regime. EMA will regulate the CGE to ensure that the gas procurement framework improves the security and resilience of Singapore’s natural gas supply to the power sector, while keeping prices competitive.

Proposal to Allow EMA to Recover Costs for Energy Security, Market Development, and Decarbonisation Related Services

5. Respondents asked whether the Future Energy Fund (FEF) announced at Budget 2024 could be used to fund energy security, market development, and decarbonisation services provided by EMA. The FEF was established to support large, strategic investments that will be necessary for Singapore’s energy and carbon transition. This will complement the proposed amendments that will enable EMA to recover the cost of providing services required for the proper functioning of our energy system.

6. Some respondents shared that these charges could have an impact on electricity prices. They asked for more details about the parties EMA intended to recover these costs from, and requested for a notice period before the proposal is implemented. EMA will endeavour to consult and provide reasonable notice to all relevant parties before introducing new services for which costs will be recovered from consumers. It will also explain and communicate any cost increases transparently. Furthermore, EMA will seek to recover the costs chiefly from persons who benefit from these services. As a safeguard, all cost recovery proposals will have to be approved by the Minister for Trade and Industry.

Proposal to Facilitate Shared Access to Critical Energy Infrastructure

7. Respondents asked about the definition of critical energy infrastructure (CEI) and suggested that EMA consider mechanisms other than directives to facilitate shared access. Some respondents also asked about safeguards to minimise the impact on investor confidence, reduce the burden on property owners and moderate costs for consumers.

8. CEI refers to installations that are required by licensees to provide electricity and gas supplies (e.g. infrastructure supporting power generation units, waterfront jetties capable of unloading fuel oil, transmission cables and gas pipelines). The proposed amendment is similar to EMA’s current powers under Section 20A of the Electricity Act. When determining whether to direct owners to facilitate shared access to CEI, EMA will consider both the interests of owners and the national priority of ensuring energy security in land-scarce Singapore. Directives will only be exercised if EMA considers such access necessary and in the public interest to ensure energy security and reliability.

9. Similar to the provisions in Section 20A of the Electricity Act, owners may appeal to the Minister for Trade and Industry for a review of EMA’s directions. Additionally, should parties fail to reach an agreement on the terms of use, either party may request the Minister for Trade and Industry to establish an Appeal Panel to determine the reasonable terms for the agreement (e.g. compensation amount).

Proposal for Approval Obligation for Repurposing Electricity and Gas Assets

10. Respondents asked about the definition of electricity and gas assets, how EMA will evaluate requests to repurpose assets and whether they would be able to appeal against EMA’s decisions. Electricity and gas assets refer to installations that are required by licensees to provide electricity and gas supplies (e.g. power generation units, transmission cables and gas pipelines). When assessing requests to repurpose electricity and gas assets away from their primary use, EMA will seek to strike a balance between owners’ commercial needs, while ensuring that energy security and system reliability in land-scarce Singapore will not be compromised. Owners may appeal to the Minister for Trade and Industry for a review of EMA’s decision.

Proposal to Empower EMA to Implement Power Rationing during Emergencies

11. Respondents asked when power rationing would be activated, how rationing measures would be communicated and whether alternative measures (e.g. demand response) could be triggered to reduce the likelihood of power rationing. To minimise disruptions, respondents suggested limiting the duration of power rationing and not subjecting entities which perform critical activities to such measures. Some respondents also suggested that affected parties should be compensated for any losses or damages caused by power rationing.

12. Power rationing is an emergency measure that will be undertaken as a last resort. These powers allow us to implement power rationing expeditiously during a crisis to reduce the risk of blackouts. EMA will relax these power rationing measures once the measures are no longer required for system stability.

13. Before it is implemented, EMA will notify affected parties through different communications channels. During power rationing, critical needs and essential public services (e.g. healthcare, public security, communications) will be prioritised. However, it is not practical for EMA to provide compensation to affected parties since power rationing, if implemented, is a necessary measure to stabilise the system during an emergency.

Conclusion

14. MTI and EMA thank all respondents for their valuable feedback. We have taken the inputs into consideration when finalising the proposed legislative amendments. The Bill will be tabled in Parliament in the coming months.

Detailed Description

Introduction

1. The Ministry of Trade and Industry (MTI) and the Energy Market Authority (EMA) are seeking feedback on proposed amendments to the Energy Market Authority of Singapore (EMA) Act, Electricity Act and Gas Act. The public consultation period is from 8 May to 5 June 2024.

Background

2. In October 2022, Singapore announced a national climate target of net-zero emissions by 2050, as part of our Long-Term Low-Emissions Development Strategy. To get to net-zero, we will need to decarbonise the power sector. Power generation, which is primarily from natural gas, accounts for about 40% of Singapore’s carbon emissions today. Developing different decarbonisation pathways such as electricity imports and hydrogen will involve significant investments. Singapore’s energy landscape will also change significantly, including in the way we regulate energy markets and plan for infrastructure development. We will therefore need to update our regulatory regime to support decarbonisation, ensure energy security, and keep our power sector cost competitive. 

Overview of Amendments

Proposal 1:
Establish Regulatory Regime for Centralised Gas Procurement

3. As announced in October 2023, MTI and EMA intend to establish a Central Gas Entity (CGE) to aggregate the demand for gas from power generation companies and centralise gas procurement for the power sector. This will allow us to benefit from demand aggregation, diversify our energy sources, and ensure that there is sufficient gas to meet our power needs.

4. To implement this proposal, we intend to amend the Electricity Act to (i) introduce the requirement for power generation companies to procure gas solely from the CGE, with existing gas supply contracts to be exempted from this requirement, up till the contract expiry date; and (ii) empower EMA to introduce gas procurement terms on generation companies, such as minimum gas contracting obligations to ensure they contract sufficient fuel.

5. In addition, we intend to amend the Gas Act to empower EMA to regulate the CGE, by (i) adding the centralised procurement and supply of gas to the power sector by the CGE as a licensable activity by EMA; and (ii) allowing EMA to regulate the CGE on matters such as sources and tenures for upstream gas contracts.

Proposal 2:
Allow EMA to Recover Costs for Energy Security, Market Development, and Decarbonisation Related Services

6. Amidst the energy transition, EMA may have to implement new initiatives to (i) strengthen energy security; (ii) develop a competitive market; and/or (iii) support the decarbonisation of the power sector. We intend to amend the Electricity Act and Gas Act to allow EMA to recover the costs for such initiatives. Any costs recovered will have to be approved by the Minister, and will be collected from licensees or from consumers who benefit from these initiatives. We will exercise these powers only when necessary and with due care, to ensure that overall electricity costs are kept in check.

Proposal 3:
Facilitate Shared Access to Critical Energy Infrastructure

7. Critical energy infrastructure refers to installations that are required by licensees to provide electricity and gas supplies. Due to Singapore’s limited land size, there could be instances where electricity or gas licensees need to access critical infrastructure owned by other persons, including non-licensees, in order to carry out their functions. For example, electricity importers may need access to electricity distribution infrastructure owned by other licensees in order to import electricity from other countries.

8. Therefore, we intend to amend the Electricity Act and Gas Act to allow EMA to direct¹ owners of critical energy infrastructure to enter into an agreement for licensees to gain access to the critical energy infrastructure, with reasonable compensation provided for the owner. If both parties fail to reach an agreement, either party may request for the Minister to establish an Appeal Panel to determine the reasonable terms for the agreement. These powers will only be exercised if EMA considers access necessary in the public interest to ensure energy security and reliability.

Proposal 4:
Approval Obligation for Repurposing of Critical Energy Infrastructure

9. With the energy transition and given the limited availability of land earmarked for public utilities, owners of existing critical energy infrastructure might intend to repurpose such infrastructure for other uses, even if the infrastructure is required for energy security and reliability. To facilitate EMA’s system planning and safeguard our energy security, we intend to amend the Electricity Act and Gas Act to require owners of critical energy infrastructure to seek EMA’s approval before repurposing such infrastructure.

Proposal 5:
Empower EMA to Implement Power Rationing during Emergencies

10. The 2021/22 global energy crisis highlighted the risks that global gas supply disruptions could cause to Singapore’s electricity supply. While Singapore avoided supply disruptions then, we must prepare for future emergencies, no matter how unlikely they might be. We intend to amend the Electricity Act to equip EMA with powers to direct licensees and consumers to ration power for extended periods of time to maintain the overall stability of the power system. These powers will be exercised as a last resort under extreme situations, and the duration of power rationing will not be longer than necessary. Similar regimes are in place in other countries, such as France and Germany.

Invitation to Provide Feedback

11. Members of the public are invited to submit their feedback and comments by 5 June 2024 via email at EnergyLegislation@mti.gov.sg or mailed to the address below:

Ministry of Trade and Industry
100 High Street, The Treasury
Singapore 179434
Re: Energy Legislation Consultation

12. Your feedback is important to us. All comments received will be considered. However, we will not be able to individually acknowledge or address every comment. To maintain confidentiality of feedback contributors, we will anonymise and aggregate the results of this public engagement.

¹ This is similar to EMA’s current powers under Section 20A of the Electricity Act, where EMA can direct electricity licensees to allow a transmission licensee to establish a connection to the electricity licensees’ electrical plant.