Chang Youngho & Nur Azha Putra, Straits Times 18 Sep 08;
ENERGY security traditionally focuses on ensuring supply, but we also need to address how all levels of society have access to affordable power.
In Singapore, industries, rather than households, account for the bulk of electricity consumption - 80 per cent in 2004, according to the Energy Market Authority (EMA).
How does Singapore's energy policy affect both types of consumers? Released in November last year by the Ministry of Trade and Industry, the National Energy Policy Report (NEPR) outlines an energy policy framework at three levels: national, regional and global.
At the national level, the Government pursues open market principles and initiatives, such as the liberalisation of electricity and gas markets and the diversification of energy resources. At the regional and international levels, Singapore collaborates with other states via platforms like Asean, the East Asia Summit and the United Nations Framework Convention for Climate Change.
The three main aims of the NEPR are economic competitiveness, environmental sustainability and energy security.
For Singapore to remain competitive, the Government has to ensure electricity prices and resource allocation are determined by the market. Therefore, since 1995, the Government has liberalised the electricity and gas industries, once state-owned and managed.
As for environmental sustainability, the Energy Efficiency Programme Office was set up to turn Singapore into an energy-efficient nation. And as for energy security, the strategy is to diversify the nation's energy mix, currently skewed too much towards piped natural gas (PNG) and oil imports.
Last year, Singapore's electricity was generated mainly by PNG, followed by fuel oil, refuse and diesel. About 70 per cent of its crude oil is imported from the Middle East, with Saudi Arabia accounting for almost 33 per cent of it. Singapore's PNG supplies come from Indonesia and Malaysia.
Singapore's energy mix and gas sources are one of the least diversified in Asean. To fix this, the Government plans to build a liquefied natural gas (LNG) terminal. It will enable Singapore to import LNG from countries far away. The Government is also exploring solar energy and photovoltaic technology.
At a recent regional workshop on energy security organised by the S. Rajaratnam School of International Studies' Centre for Non-Traditional Security Studies, some participants questioned the NEPR's premises. Will diversification really lead to energy security? Importing LNG may widen Singapore's supply base, but can energy security be achieved when some of the world's largest gas suppliers are in politically volatile regions? Is it feasible to rely on solar energy? Isn't photovoltaic technology just a 'fair-weather' friend?
The free market system has its problems. Its benefits may not be felt when there is a wide income gap, and the market equilibrium is determined by the demands of the middle or upper class. Lower-income groups could be left behind if a fixed tariff is applied across all households, regardless of their income level. The efficient transmission of electricity does not mean that everyone will be able to afford it. More attention should be paid to consumers who do not have alternative electricity sources or suppliers.
Unlike residents in landed properties who can opt for other energy sources, those who live in Housing Board flats depend mainly on electricity provided by SP Services. Perhaps this is why the EMA and SP Services introduced the Pay-As-You-Use (Payu) metering scheme and the Electricity Vending System (EVS) in 2005 and last year respectively.
Under the Payu scheme, consumers pay in advance for their electricity. The scheme is available to households who have defaulted on their payments or are in arrears. Though the scheme helps these households manage their electricity use better, it does not address the issue of affordability. They still pay the same tariff as customers on the conventional scheme. The EVS, now being tested, allows households and small businesses to choose their own retailers and packages that suit their needs.
Energy security should not simply revolve around market equilibrium and diversifying sources. It should make energy affordable for everyone.
Chang Youngho is an assistant professor and Nur Azha Putra is an associate research fellow at the S.Rajaratnam School of International Studies, Nanyang Technological University.
