Electricity Retailer Exits After Less Than 1 Year in the Open Electricity Market

Last Updated on 2019-01-06 , 2:34 pm

Imagine it’s the year 1997: Singtel is the only telecommunication company in Singapore.

Unless you subscribe to Singtel, you won’t be able to WhatsApp your friends and log in to Instagram (I know, back then there was only Facebook and the Goody Feed app, but this is just an imagination, so don’t nitpick lah).

Then Singapore decided to open the telecommunication market to other commercial parties. M3, MoonHub, YourPublic, SquareDeath and many other retailers come in to take a slice of the pie, and seeing that their prices are much lower, you said “sayonara” to Singtel and signed on with one of the new telcos that is cheaper. You’re, however, now tied to a contract, but it’s okay: price is priority.

Then, in less than a year, you receive a letter from Singtel, telling you that your telco is now no longer operating and you’ll be using Singtel back.

This might not have happened in 1997, but it’s happened in 2019. And this time, it’s not telecommunications but electricity.

Read on and you’ll understand.

Nationwide Launch of Open Electricity Market

You’ll need to understand the Open Electricity Market for this article to make sense.

If you look old enough to be someone paying the electricity bills in your household, chances are you’d have been stopped by someone in the mall, in the petrol station or just about anywhere with these three words: “Have you switched?”

No, it has nothing to do with Super Mario and Nintendo Switch.

You see, since 1 November 2018, certain households in Singapore can switch their electricity retailers–they no longer need have to buy electricity from merely SP Group.

Here’s the exact rollout schedule:

(For your info, people in Jurong could buy from other retailers since April 2018 as part of a soft launch.)

According to a The Sunday Times article, about 30% of those eligible to change have done so.

And guess what? In a small market like Singapore, over ten electricity retailers are fighting for a piece of the pie, and it’s not surprising that the competitiveness would have filtered out some that doesn’t make the cut.

But we didn’t expect it to be so fast—especially when it’s not fully rolled out yet.

Red Dot Power

Lest you’re not aware, those companies that now sell electricity to consumers like you and me aren’t new startups wanting a slice of the pie.

Usually, they’ve been in the business for years, but their core business is to sell electricity to businesses. You see, unlike our HDBs, certain businesses require a lot of electricity.

Case in point: a shopping centre. To keep a whole shopping mall cool, the amount of electricity used is crazy, and so businesses can buy wholesale electricity from these businesses instead of SP Group.

Now that the retail consumer market is open for consumers, they’re just setting up another department to sell electricity to consumers. In business terms, these are usually B2B (business to business) companies, but are now also doing B2C (business to consumers).

And Red Dot Power is one of them.

In fact, it’s one of the first few that advertised its B2C electricity to consumers, beginning from April when Jurong had a soft launch of the OEM, with then a booth in Westgate.

And their price is rather competitive: at 16.28 cents per kWh if you sign up at their booth, it’s more than 30% cheaper than SP Group’s current rate of 23.85 cents per kWh.

The only drawback? You’ll be tied to a contract, but hey: it doesn’t matter if it’s cheap, right?

But before you know it, they’re exiting the market.

(Not So) Sudden Exit from Red Dot Power

Back in October, there were allegedly “market rumours” that the company is closing down its retail business. They clarified on their Facebook Page that it’s untrue, and even added that the “mis-information appears to be spread by some quarters who are either not fully aware of the strengths of Red Dot Power or by intentions to malign our reputation.”

Then, all of a sudden, on 3 January 2019, they’ve a notice on their website announcing their exit from the retail market.

In the letter, it states that they’re exiting the market on 4 January 2019 due to a “financially challenging period”. Existing customers would have no disruption to their service: the account would still be under Red Dot Power till 6 January 2019, and on 7 January 2019, it will be transferred to SP Group. They would not need to pay any early contract termination charges (of course lah?!) and the security deposit would be held by SP Group.

The business will still be operating its other technology business segment.

SP Group Allegedly Sent Notification Before Red Dot Power Does So

Apparently, a Red Dot Power subscriber allegedly received an email from SP Power on a sudden change of his electricity power to SP Group even before Red Dot Power has announced its exit.

Red Dot Power then alleged that SP Group should have sent out the information only after Red Dot Power has announced their exit.

But seriously, this is a large dent in our confidence: I mean, yes, our electricity supply isn’t affected and whatnot, and it’s easy to switch, but what if I switch to another retailer and they exit just as fast?

Remember, there are more than ten companies competing in Singapore.

I bet my boss’s car that this won’t be the last.