Letter from Jenny Teo
Director, Corporate Communications
Energy Market Authority
Today Online 22 Sep 08;
IN “POWER to the People?” (Sept 15), Mr ConradRaj questioned the need to divest our power stations. The story also suggested that the Government was doing so to extract a “good profit” and to avoid “having to explain to the public high (electricity) tariffs”. But this was not why the power stations were divested.
The divestment of the generation companies should be seen in the broader context of the Government’s strategy to open up and restructure the electricity industry. The first step was to separate ownership of the monopoly parts of the market, like transmission and distribution, from the contestable parts, like power generation and retail. All companies in the contestable business would then compete on a level playing field.
By 2001, we had three separate generation companies competing in the market, i.e. Senoko Power, PowerSeraya and Tuas Power, albeit under the common ownership of Temasek. From the outset, the government’s intention was for Temasek to sell the companies at an appropriate time. How the divestment is done is a commercial decision for Temasek to make. From a regulatory perspective, EMA is satisfied that the divestment will achieve our aim of enhancing market competition in an orderly fashion, while maintaining the reliability and security of energy supply.
Over the years, competition in the electricity market has brought about real benefits to all Singaporeans. While our electricity prices have gone up primarily because of the increase in world oil prices, they would have been much higher today if not for competition driving efficiency and productive gains, which are passed on to consumers. With the participation of new players and further liberalisation in the industry, there will be more scope for product innovation, better service, and competitive pricing, as Singapore’s energy needs grow.
