News

Request for Feedback on Amendments to Electricity Act (Cap 89A) 
Posted on Wednesday, January 25, 2006 - 08:00 PM

The Energy Market Authority and the Government intends to effect amendments to the Electricity Act to strengthen regulatory oversight of the electricity market. The public’s feedback is sought on the proposed amendments.

The document is as follows:-

Aim

1. The Government intends to effect amendments to the Electricity Act to strengthen regulatory oversight of the electricity market. This document highlights the main intentions of the proposed amendments at Appendix 1. The public’s feedback is sought on the proposed amendments.

Licensing Regime

2. In Oct 2003, Singapore Power (SP) applied to restructure PowerGrid Ltd, the transmission licensee, into two separate entities: SP PowerAssets Ltd (SPPA), an asset company; and SP PowerGrid Ltd (SPPG), a management company. SPPA holds the assets and business of power grid while SPPG, as SPPA’s agent, manages the business of SPPA. Given the new structures, it is proposed to amend the Act to license SPPG to allow for more adequate control over the grid infrastructure.

Security Safeguards

3. Control of ownership of critical infrastructure: As the electricity grid is critical infrastructure whose failure can have disproportionate effects on the economy, it is proposed that the Act be amended to give the Energy Market Authority (“EMA”) oversight and powers of approval over the ownership of SPPA and SPPG, which owns and manages the electricity grid, respectively. This amendment will allow EMA, in consultation with the Ministry of Trade & Industry (“MTI”) and any other relevant Government agencies, to reject any potential ownership transfer that is assessed to be detrimental to national security.

4. Control of key personnel appointed to operate critical infrastructure: It is proposed that EMA’s approval be required before SPPA/SPPG can appoint a person as its chief executive officer, its director or the chairman of its board of directors.

Power to Obtain Information

5. The Electricity Act currently gives EMA the power to obtain information and also to set the restrictions on disclosure of confidential information. It is proposed to (i) vest EMA with greater powers to obtain information, (ii) make explicit that in carrying out its functions under the Act, EMA would be empowered to obtain relevant documents and materials from any person without payment, and (iii) empower EMA to disclose such information to a member of a committee or panel acting under delegation by the Minister.

Improvement to Penalty Structure

6. The Act currently provides only for a one-time financial penalty for infringements regarding the provision of electricity related activities without licences, and contravention of electricity licence conditions. However, the infringements may be on a continuous basis (e.g. consistently operating without holding a valid licence or consistently infringing licence conditions) for which one-off financial penalties/fines might not be sufficient. For the penalty to be effective, it is proposed to amend the Electricity Act to hence the penalty regime for offences and contraventions under the Electricity Act.

Ambit of Market Rules

7. Under the current Electricity Act, changes to the market rules governing the electricity market are evaluated by a Rules Change Panel, and upon endorsement, are submitted to the EMA for approval. For effectiveness in policy implementation, it should be a requirement for the market company (i.e. Energy Market Company) to ensure that the market rules are always updated to be in line with prevailing Government policy.

8. The Electricity Act currently provides that the market rules may include authorizing and governing the imposition of financial penalties on market participants. The market company (Energy Market Company) and the market support services licensee (SP Services) are currently not covered under the Electricity Act as they are not defined as market participants. However, as they play a vital role in the electricity market, it is proposed to widen the scope of the Electricity Act to subject these players to financial penalties, just like the current market participants.

Revised Appeal Process

9. Section 98 of the Act provides for a licensee or any other person aggrieved by EMA’s exercise of any discretion vested in it by the Electricity Act, to be able to make an appeal to Minister, whose decision shall be final. In the interest of greater clarity, it is proposed that the Electricity Act be amended to be specific on the responsibility of the appellant to provide the grounds for the appeal, in a manner and within such period as specified by the Minister. It is proposed that any such appeal must be lodged with the Minister within 14 days after the EMA gives the relevant party notice in writing of the decision. This is consistent with the other appeal provisions in the Electricity Act.

10. It is also proposed to amend the Electricity Act such that the Minister would have the flexibility, on the merits of each case, to refer appeals of a technical nature (requiring specialized knowledge or experience) to an Appeal Panel (appointed by the Minister) for resolution.

Terms for Generation Companies to Supply Electricity

11. Currently, the Electricity Act requires any person who requires a supply of electricity to accept supply conditions, such as the right to use its premises, to enable the transmission licensee (i.e. SPPA) to comply with its licence. However, such conditions are not imposed on generation companies (gencos) who supply electricity. Therefore, gencos could potentially restrict the transmission licensee’s ability to develop and expand the electricity grid, which would be detrimental to the development of the electricity market.

12. It is thus proposed that the Electricity Act be amended so that the transmission licensee or its agent may perform any work on any premises for the purpose of developing the transmission system or effecting a connection to any person, notwithstanding any existing or future contracts signed between any parties. To guard against abuse of powers by the transmission licensee, it is proposed that an avenue of appeal to EMA be provided. EMA will investigate and decide on the appeal and its decision shall be final.

Request for Comments and Feedback

13. EMA invites comments and feedback on the proposed amendments to the Electricity Act as set out in Appendix 1.

14. If you have comments or feedback, please submit them in the format as
shown in Appendix 2.

15. Please send your submission (preferably by e-mail) to:
teo_nan_shing@ema.gov.sg and lilian_lau@ema.gov.sg

16. Alternatively, you may also send your submission by post/fax to the following address:
Dy Director (Market Licensing & Control)
Energy Market Authority
111 Somerset Road, #15-05
Singapore 238164.
Fax: (65) 6 835 8084

17. Anonymous submissions will not be considered.

18. All comments and feedback must reach EMA by 5 pm on 3 February 2006.

19. If you need any clarifications, please contact Mr Teo or Ms Lau by e-mail at teo_nan_shing@ema.gov.sg or lilian_lau@ema.gov.sg, respectively, not later than 27 January 2006.

20. EMA will acknowledge receipt of all submissions. Please contact Ms Lau if you have not received an acknowledgement of your submission within two business days.

21. EMA reserves the right to make public all or parts of any written submissions made in response to this Request for Feedback and to disclose the identity of the source. Any part of the submission, which is considered by respondents to be commercially sensitive, should be clearly marked and placed in a confidential annex. EMA will take this into account regarding disclosure of the information submitted.

The appendixes can be found at www.ema.gov.sg