The electricity market is heating up.
With electricity prices spiking several times in the last few months, both households and retailers have been impacted.
Consumers have the option to switch to a different retailer if they’re unsatisfied with their current one, but retailers have to either accept the losses or bow out of the game.
Just a few days ago, iSwitch Energy announced that it was doing just that – closing up shop.
And its announcement seems to have sparked another exit from the market.
Another Electricity Retailer Closes Down; 2nd in 3 Days
Ohm Energy is now the second electricity provider in just a few days to leave the electricity market.
In a statement yesterday (15 Oct) on its website, Ohm Energy said it will be exiting the electricity market with immediate effect.
“Over the past few months, we have seen a volatile electricity market that has made the pricing of our plans at lower than Regulated Tariff unsustainable,” it said.
As you painfully know, the electricity tariff increased by 3.1% recently, thanks to the higher cost of fuel for producing electricity by power generation companies.
Excluding GST, the tariff rose from 23.38 cents to 24.11 cents per kWh, meaning the average monthly bill for a four-room HDB flat will increase by $2.49.
This is the highest tariff since the first quarter of 2020.
Just two days before, on Wednesday (13 Oct), iSwitch Energy announced its exit from the market due to the “current electricity market conditions.” It will be ceasing operations from 11 Oct.
So, why is this happening?
Soaring Energy Prices
In short, soaring energy prices are likely to blame for the closures.
According to the monthly trading reports from the Energy Market Company, the average Uniform Singapore Energy Price (Usep) for July last year was $60.05 per megawatt hour (MWh).
This has since shot up to $136.57/MWh in August this year, more than double the amount.
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But that wasn’t the worst of it.
Usep, which reflects the price at which all electricity retailers buy from the wholesale market, indicates the energy prices in Singapore every 30 minutes.
And at some point on Thursday (14 Oct), energy prices peaked at a whopping $3,811.16/MWh. But it also dropped to $267.82/MWh on the same day.
So, what will happen to iSwitch Energy and Ohm Energy customers?
Accounts Will be Transferred to SP Group
In its statement, Ohm Energy said it’s working with the Energy Market Authority (EMA) and SP Group to ensure a smooth transfer of all its existing customers to SP Group from 20 Oct.
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“We would like to assure you there will be no disruption to your electricity supply,” it said.
As a token of appreciation for their support, customers will also receive an ex-gratia payment (kind of like a termination payment).
“Thank you for your support. It has been an honour to serve you,” it said.
iSwitch Energy customers will also have their electricity accounts transferred to SP Group on 12 Nov this year. You can read more about that here.
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Featured Image: Tang Yan Song / Shutterstock.com
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