It has been a year since the Open Electricity Market (OEM) was soft-launched in Jurong (in April 2018), and has gradually been rolled out in phases islandwide.
Unfortunately, despite educational initiatives from the Energy Market Authority (EMA) and marketing efforts by individual retailers, the number of households who made the switch has been less than ideal.
#1 Why Are Retailers Able To Charge Significantly Cheaper Prices Than SP Group?
Singaporeans are a skeptical bunch. If you give them a deal that sounds too good to be true, they would wonder what’s the catch.
With retailers offering Discount-Off Regulated Tariff plans of around 25%, and Fixed Price plans that give similar discounts based on prevailing tariffs, many Singaporeans are wondering, how are these retailers able to do so.
The answer is actually pretty simple.
First of all, SP Group has repeatedly emphasised that they do not set the prices they charge consumers. SP Group is mandated to charge the regulated tariff, revised every quarter by EMA on a sustainable, cost-recovery basis.
To ensure SP Group can continue to sustain operations, you can imagine that there is a margin of safety built in by EMA when setting the tariff. OEM retailers, on the other hand, could be more aggressive with their pricing, perhaps even forgoing near-term profits for the purpose of gaining market share and enjoying long-term economies of scale.
Like the ride-share wars between Grab and Uber, consumers are the greatest beneficiaries of this intense competition for new customers, and they should take full advantage of the competitive prices and promotions offered today.
#2 Will My Electricity Supply Be Less Reliable If I Switch To A New Retailer?
A big misconception is that it might be risky to switch to one of the new OEM retailers, since SP Group has built up a deserved reputation of providing Singapore with (relatively) reliable power over the years.
However, this is a misconception, since SP Group continues to be responsible for maintaining our nation’s power grid islandwide, including the substations that deliver power to your homes.
Thus, your risk of a power interruption has nothing to do with who you buy electricity from, whether that’s an OEM retailer or SP Group.
#3 What Happens If My Chosen Retailer Goes Bust?
After participating in the OEM soft-launch in Jurong, Red Dot Power announced in January 2019 that they will be exiting as an OEM retailer. This has led to concerns that more retailers might follow suit as the market consolidates and finds a sustainable equilibrium.
This question was brought up in Parliament, and Senior Parliamentary Secretary for Trade and Industry Tan Wu Meng assured Singaporeans that in the event any retailer decides to exit the market or goes bust, all customers would either be transferred to a new retailer who has agreed to honour the existing contracts, or return to SP Group and be charged prevailing tariff.
In any case, there will be no disruption to households’ power supply.
#4 Is There Any Good Reason To Stay With SP Group?
There are many good reasons for switching to an OEM retailer (chief among them, cost savings), but here are some possible reasons some might want to stay with SP Group.
You’re about to move house: If you’re about to move house, you might not want to make the switch, only to have to deal with early termination fees or the hassle with doing an account transfer. You can check out the FAQ of your prospective retailer or contact their customer service department, because some retailers have stated they would waive early termination charges and admin fees when customers move house.
You’re worried about power being cut off: Cashflow for some households might be a challenge, and arrears on their electricity bill for months can be a reality some grapple with. SP Group’s status as a government-linked entity mean that they have been known to be more lenient when it comes to extending payment terms and delay cutting off the power to households, even though they might legally be able to do so sooner.
You don’t want yet another bill: We already have enough bills to deal with, and adding one more company to have to pay seems like a hassle. However, is that worth paying a 25% premium to you? Also, some retailers like Ohm have partnered with SP Group so that you will continue to receive one consolidated bill for your utilities.
#5 Got Promotions/Referral Code?
Competition among OEM retailers is extremely fierce during this initial rollout. In order to entice customers, retailers are offering limited-time deals, complementary insurance, free gifts and more. So if you’re considering making the switch, you should visit the website of the respective retailers and find out what additional discounts and gifts you can receive.
For convenience, here is the list and links to all 13 OEM retailers:
DollarsAndSense readers considering a plan from PacificLight can enjoy additional rebates when you sign up online. These rebates are on top of any referral codes, so be sure to take advantage of referrals as well!
If you’re signing-up for a Super Saver 36-month plan, use the promo code 68DOLLARS to receive a $68 rebate (excl. GST).
If you’re signing-up for any 24-month plan, use the promo code 48SENSE to receive a $48 rebate (excl. GST).
These promo codes are exclusive to DollarsAndSense and are limited to the first 200 online sign-ups, valid till 30 April 2019.
In addition, if you’re a new or existing American Express (AMEX) cardholder, you can also receive additional rebates. PacificLight customers who sign up for a new AMEX card would enjoy $80 rebate off their electricity bills with a minimum $1 charge on eligible spend within the first month.
Existing AMEX cardholders who set up recurring payment for their PacificLight bills (minimum bill size of $10) will get a one-time credit of $40 to their next American Express statement. Limited redemptions available, terms and conditions apply.
Here’s an example of how you could stack up promo codes and rebates as a PacificLight customer on the Super Saver 36 month plan: