SINGAPORE – Electricity retailers in Singapore are better placed to ride out the current energy crisis compared with the one in 2021, even as wholesale electricity prices here have been climbing since the Middle East conflict erupted.

But analysts warn that the risk of physical fuel shortages could place a strain on the sector.

Electricity retailers have already begun making changes to their power plan offerings.

After the 2021 global energy crisis saw six retailers close down following wild swings in wholesale electricity prices, regulatory changes were made in 2023 so that retailers are more resilient against market volatility, and price shocks do not cascade down to households and businesses.

These changes include requirements to hedge at least 80 per cent of their contracted consumer demand on a rolling 24-month forward basis, and maintain a performance bond to cover the unhedged quantity, among other things.

There are now 10 open electricity market (OEM) retailers serving about 590,000 or 36 per cent of households, and 64,000 or 32 per cent of business consumers.

At the peak, there were 14 OEM retailers.

That the current retailers are continuing to offer price plans and take on new customers signals that they can still sufficiently hedge their electricity price exposure, said economist David Broadstock, a partner at energy industry consultancy The Lantau Group.

If the retailers feel that new contracted demand cannot be hedged, they may temporarily stop accepting new customers, he said.

More inquiries for fixed-price plans Flo Energy, the first OEM retailer to be approved under the Energy Market Authority’s (EMA) enhanced regulatory regime, told The Straits Times that it has seen more pricing inquiries from new and existing clients, as businesses seek to manage their exposure to market volatility.

“While this hasn’t yet translated into a significant increase in completed sign-ups, it reflects a growing interest in fixed-price contracts as customers evaluate their options,” its chief executive, Mr Matthijs Guichelaar, said.

He added that the retailer, which serves large businesses and SMEs, is set to launch electricity plans for residential households later in 2026.

Because Flo hedges at least 80 per cent of its contracted load in advance, this ensures that customers on longer-term contracts, such as two- or three-year plans, are protected from short-term market volatility, Mr Guichelaar said.

For any remaining open position, retailers are required to post a performance bond to safeguard against potential contract breaches, he added.

Senoko Energy president and chief executive Jothilingam Thiraviam said the retailer is continuing to offer fixed-rate electricity plans and has extended to its household customers early renewal windows of up to 180 days to help them secure current rates earlier and better manage their expenses.

Tuas Power said “upstream supply conditions of fuel supplies amid the ongoing Middle East crisis will exert pressure on our electricity prices”.

Retailers’ electricity costs increase when hedging costs become more expensive due to greater market uncertainty and when liquidity tightens and collateral requirements increase.

This has already resulted in fixed-price residential plans for households rising by as much as 11 per cent since the war started on Feb 28.

Fixed-price plans for households ranged from 24.88 to 28.67 cents per kilowatt-hour on Feb 27.

By March 27, prices had climbed to between 28.8 and 29.18 cents per kWh, according to the OEM’s price comparison website.

At the lowest end of the hikes, the rate rose 1.15 per cent – Keppel Electric’s Fixed12 plan with up to a $10....