28 Jan, 2019 9:33 AM / by Quek Leng Chuang
The best way to purchase power as a business customer in Singapore is to procure it at a plan derived from wholesale electricity prices (WEP). Primarily because of the unique characteristics of the National Electricity Market of Singapore (NEMS). Also, the WEP is essentially the cost price of electricity for all retailers, and procuring electricity on this cost plus basis is the cheapest and most transparent option possible to the consumer.
ES Power recognises this, and offers 3 such wholesale based price plans, with the WSP, the WSP Protect, and the WSP Protect Plus.
The Wholesale Plan is derived from the actual WEP, Whole Sale Price of EMC (that varies every 30 minutes) and then adding a flat subscription fee 0.X cent/kWh. Where X depends if the customer is a Low Tension (LT) or High Tension (HT) user, and the consumption size. Fig 1 shows how a simulation of a typical 2,000 KWh/mth LT customer on the WSP plan. This is depicted by the solid green line, with a simple average tariff that varies every month. Regardless of the power price spike in Oct 2018, the simple average tariff for this customer for the entire 2018 would have been 17.02 cents/KWh. For comparison, the blue solid line, and blue dotted line is the SP regulated tariff and the 20% discount of the SP tariff.
Fig 1. Simulated WSP for LT – 2,000 KWh/mth consumer over the entire 2018
The Oct 2018 spike while discernibly tolerable, and even acceptable, it will nonetheless present a risk to the customer. A risk that can be eliminated by applying a cap, i.e. some form of price ceiling protection that limits the exposure of price spikes the customer.
The WSP Protect Plan, sets the protection limit at the SP regulated tariff. So for a small added premium to the subscription fee, the customer is assured that the maximum tariff is the SP regulated tariff regardless how high electricity prices may have spiked up to. Should the WEP prices plunge as it did in early 2016, the consumer still enjoys these rock bottom prices. You can have your cake and eat it too!
Fig 2. Simulated WSP Protect for LT – 2,000 KWh/mth consumer over the entire 2018
The simulation in Fig 2, showed that the WSP Protection plan for 2018 whilst providing peace of mind to the consumer, did not provide the intended protection, because the monthly average tariff in Oct 2018, did not exceed the SP tariff. Hence the average tariff for the WSP Protect customer in 2018 would have been 17.32 cent/KWh as opposed 17.02 cents/KWh of the WSP plan customer.
For the more conservative customer, we have the WSP Protect Plus, where the protective maximum tariff ceiling is set at 20% discount off the SP regulated tariff. Fig 3 shows the simulation of the WSP Protect Plus for a 2,000 KWh/mth consumer. We observe that the peak in OCT 2018, would have been substantially shaved off (from the Green Dotted line to the Solid Green Line). However cost avoidance gained from this shaving, was not adequately substantial to provide an overall annual savings. In fact the simulation for WSP Protect Plus registered a simple annual average tariff of 17.39 cents/KWh.
Fig 3. Simulated WSP Protect Plus for LT – 2,000 KWh/mth consumer over the entire 2018
In closing, the conditions unique to the Singapore Electricity Market offers all customers the opportunity to purchase power for their businesses or homes at price plans derived from the WEP. The risk and reward favours the customer, and a simple average simulation over 2015 to 2018 yielded a 3 year average tariff of just 14.75 cents/mth for a 2,000 KWh/mth LT customer.
Regardless of the tolerable historical risk the consumer on a wholesale price plan will face. Protection in the form of Price Caps are available, and ES Power offers these cap levels. The first with the WSP Protect at the SP regulated tariff. The other set at 20% discounted off the SP regulated tariff. Caps provide financial protection at a slight premium in price, but provides a larger peace of mind to the customer.
Written by Quek Leng Chuang
LengChuang is a chemical engineer and an expert in carbonomics. He is the founder and owner of Environmental Solutions (Asia) Pte Ltd.