NEMS Market Report 2013

8/21/2019 NEMS Market Report 2013

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MARKET REPORT 2013



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CONTENTS

ENERGY MARKET COMPANY

Letter from the Chairman 1

MARKET OVERVIEW

Market History 3 Industry Structure 4

Market Features 6

MARKET GOVERNANCE

Overview 8

Letter from the Chair, Rules Change Panel 9

Market Evolution 10

Letter from the Dispute Resolution Counsellor 12

MARKET PERFORMANCE

Overview of the Year 15

Energy Demand 19

Energy Supply 20

Energy Prices 23 Ancillary Markets 28

Competition in the Generation and Retail Markets 35

Settlement and Prudential Management 37

Contracted Ancillary Services 38

Market Fees 39

ADDITIONAL INFORMATION

Glossary 41

Market Entities’ Contact Details 43



1

ENERGY MARKET COMPANY : Letter from the Chairman

We will continue to work with allstakeholders to evolve the market. I amconfident that Singapore’s electricity marketwill continue to serve as a role model for

others who are embarking on the path ofmarket liberalisation.

Wong Meng Meng ChairmanEnergy Market Company

In many aspects, 2013 was a significant year for the electricity industry in Singapore.Overall, the National Electricity Market ofSingapore (NEMS) performed within the

expectations of an effective competitivemarket and demonstrated the real benefitsthat liberalised electricity markets can offer.

Singapore’s first Liquefied Natural Gas(LNG) terminal commenced operations inMay. This milestone development providesgreater opportunities for Singapore todiversify its gas sources and enhanceenergy security.

The NEMS started its second decade

of trading in an environment of surplusgeneration supply. Total registeredcapacity increased 14.9 percent fromthe previous year to reach an all-timehigh of 12,422 megawatts (MW) in 2013.This resulted from the registration of newcombined-cycle gas turbine (CCGT)units by both existing and new marketparticipants.

For the first time since the market started,total generation supply – the amount ofelectricity that is actually offered in the

NEMS – c rossed the 7,000MW mark.Electricity consumption, on the other hand,increased by only 2.4 percent comparedto 2012, to 45.2 terawatt hours.

Arising largely from the increase in supply,the Uniform Singapore Energy Price (USEP)retreated after three straight years ofincrease to end at $173 per megawatt hour.

This is a 22.1 percent drop from 2012’slevel and the biggest year-on-year drop inthe history of the NEMS. The annual valueof products traded also declined by arecord 20.1 percent to $8.7 billion.

I am happy to note that wholesale electricityprices have generally responded efficientlyto changes in the underlying drivers ofdemand and supply.

I am also pleased to observe considerable

movement in the market share of marketparticipants and generation technologiesas this demonstrates healthy competitionin the NEMS.

The combined market share of the top threegeneration companies dropped to 69.7percent in 2013. This is the first time sincethe start of the market that their combinedmarket share has fallen below 75 percent.

The retail market also saw an interestingdevelopment. Apart from SP Services,which provides market support services tocontestable consumers and is the supplier

for all non-contestable consumers, threeretailers had consistently held the top threepositions since 2004. In 2013, however,Keppel Electric successfully displaced oneof them and made it to the list of top three.

Finally, the continuous move towards moreefficient generation was most pronouncedin 2013. The marke t share o f CCGTgeneration units, currently the most efficientin the market, reached a new high of94.3 percent.

The NEMS’ stable and efficient operationscan be attributed to the concerted effort ofour regulator, governance panels, marketparticipants as well as other stakeholders.I would like to thank everyone – especiallythe members of our Rules Change Panel,Market Surveillance and Compliance Paneland Dispute Resolution and CompensationPanel – for their commitment and dedicationto the NEMS.

Dear Industry Members

CONTENTS



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MARKETOVERVIEW



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Corporatisation 1995 Electricity functions of the Public Utilities Board corporatised

Singapore Power formed as a holding company

1996 Singapore Electricity Pool (SEP) design process began

Singapore Electricity Pool (SEP) 1998 SEP commenced

PowerGrid is SEP Administrator and Power System Operator (PSO)

1999 Review of electricity industry

National Electricity Market ofSingapore (NEMS)

2000 Decision for further reform to obtain full benefits of competition

New market design process began

2001 Electricity industry legislation enacted

Energy Market Authority (EMA) established as industry regulator and PSO

Energy Market Company (EMC) established as the NEMS wholesale market operator

First phase of retail contestability

2002 Testing and trialling of wholesale market system began2003 NEMS wholesale market trading began

2004 Vesting contract regime introduced

Interruptible loads (IL) began to participate in the reserves market

2006 First wholesale market trader joined the market and commenced trading as IL provider

First commercial generator since 2003 joined the market and started trading

Retail contestability expanded to 75 percent of total electricity demand

2007 Removal of the Market Registration Application Fee

2008 Sale of Tuas Power to China Huaneng Group in March, Senoko Power toLion Consortium in September, and PowerSeraya to YTL Power in December

Embedded generators (EG) joined the market

2009 Revised regulation price cap of $300/MWh was implemented

New EGs, small generators and incineration plants joined and started trading

2010 Vesting tender was introduced to tender out a percentage of non-contestable electricitydemand to generation companies for bidding

2012 NEMS completed ten successful years of trading

2013 Singapore’s Liquefied Natural Gas (LNG) terminal started commercial operations

LNG vesting contract introduced

Market Reform Milestones

MARKET OVERVIEW: Market History

The opening of the National ElectricityMarket of Singapore (NEMS) in January2003 was the culmination of a numberof structural reforms to Singapore’selectricity industry.

Singapore’s journey to liberalisationstarted in October 1995, when industryassets were corporatised and put on acommercial footing. In 1998, the SingaporeElectricity Pool, a day-ahead market,began operations. On 1 April 2001,a new legal and regulatory frameworkwas introduced that formed the basisfor a new electricity market.

The NEMS is an integral part ofSingapore’s overall energy policy

framework which seeks to maintain abalance of the three policy objectivesof economic competitiveness, energysecurity and environmental sustainability.The NEMS places Singapore alongsidean international movement to introducemarket mechanisms into the electricityindustry as a way to:• increase economic efficiency through

competition;• attract private investment;• send accurate price signals to guide

production and consumption decisions;

• encourage innovation; and• provide consumer choice.

CONTENTS



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Singapore’s electricity industry is structuredto facilitate competitive wholesale and retailmarkets. Competitiveness is achieved byseparating the ownership of the contestableparts of the industry from those with naturalmonopoly characteristics.

Five New Market Participants Joinedthe Market

The NEMS welcomed five new marketparticipants (MPs) in 2013. Three of thenew MPs are wholesale market traderswhile two are retailers.

Singapore LNG Corporation, whichoperates Singapore’s first liquefied naturalgas terminal, joined the NEMS as a

wholesale market trader in March. This wasfollowed by GlaxoSmithKline Biologicalsin May, and ECO Special WasteManagement in November.

On the retail side, PacificLight Energy andHyflux Energy joined the NEMS in Februaryand June respectively. This brings the totalnumber of retailers in the NEMS to eight.

Participants and Service Providers in the NEMS

Generators ExxonMobil Asia PacificGMR Energy (Singapore)/PacificLight Power1

Keppel Merlimau Cogen

Keppel Seghers Tuas Waste-To-Energy Plant (Tuas DBOO Trust)National Environment AgencySembcorp CogenSenoko EnergySenoko Waste-to-EnergyShell Eastern PetroleumTP UtilitiesTuas Power GenerationTuaspringYTL PowerSeraya

Wholesale Market Traders Air ProductsBanyan UtilitiesDiamond Energy

ECO Special Waste ManagementGlaxo Wellcome Manufacturing – GlaxoSmithKline BiologicalsGreen Power AsiaISK Singapore2 MSD International GmbH (Singapore Branch)Pfizer Asia PacificSingapore LNG CorporationSingapore Oxygen Air Liquide

Retailers Diamond Energy SupplyHyflux EnergyKeppel ElectricGMR Supply (Singapore)/PacificLight Energy1

Sembcorp PowerSenoko Energy SupplySeraya EnergyTuas Power Supply

Market Support Services Licensee (MSSL) SP Services

Market Operator Energy Market Company

Power System Operator (PSO) Power System Operator

Transmission Licensee SP PowerAssets

1 Change in ownership and renamed PacificLight Power/Energy with effect from May 2013.

2 ISK Singapore withdrew as a market participant with effect from 11 December 2013.

MARKET OVERVIEW: Industry Structure

CONTENTS



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Generation LicenseesAll generators that are connected to thetransmission system are licensed by theEMA unless their facilities are less than10MW. All generators with facilities of1MW or more that are connected to the

transmission system must participate in theNEMS and be registered with EMC.

Wholesale Market TradersWholesale market traders are companies,other than generators or retailers, thatare licensed by the EMA to trade in thewholesale electricity markets. Retail Electricity LicenseesRetailers that sell electricity to contestableconsumers are licensed by the EMA.

Retailers that are registered as marketparticipants purchase electricity directlyfrom the wholesale market.

Market Support Services Licensee –SP Services A Market Support Services Licensee (MSSL)is authorised to provide market supportservices. Such services include consumerregistration and transfer, meter reading and

meter data management, retail settlementsand billing for contestable consumers.SP Services is the only MSSL. Market Operator – EMC EMC operates and administers thewholesale market. This role includescalculating prices, scheduling generation,clearing and settling market transactionsand procuring ancillary services. EMCalso administers the rule change processand provides resources that support market

surveillance and the compliance anddispute resolution processes.

Transmission License –SP PowerAssets SP PowerAssets owns and is responsiblefor maintaining the transmission system.

Power System Operator

The Power System Operator (PSO), adivision of the EMA, is responsible forensuring the security of supply of electricityto consumers. The PSO controls the dispatchof generation facilities, co- ordinatesscheduled outages and power systememergency planning and directs the operationof the high-voltage transmission system.

Regulator – EMAThe EMA is the regulator of the electricityindustry and has the ultimate responsibility

for the market framework and for ensuringthat the interests of consumers are protected.

ConsumersConsumers are classified as being eithercontestable or non-contestable, dependingon their level of electricity usage.Contestable consumers may choose topurchase electricity from a retailer, directly

from the wholesale market or indirectly fromthe wholesale market through the MSSL,SP Services. Non-contestable consumersare supplied by SP Services.

MARKET OVERVIEW: Industry Structure

CONTENTS



Energy, Reserve and Regulation ProductsThe NEMS has a number of features thatdrive efficiency and make its design trulyworld class. These include:• co-optimisation of energy, reserve and

regulation products;• security-constrained dispatch and

nodal pricing; and• near real-time dispatch.

Co-optimisation of Energy, Reserveand Regulation Products

A sophisticated process involving about50,000 different mathematical equationsis used to determine the price and quantityof the energy, regulation and reserveproducts traded. Integral to this process isthe concept of co-optimisation, wherein themarket clearing engine (MCE) considers

the overall costs and requirements of allproducts, then selects the optimal mix ofgeneration and interruptible loads (IL) tosupply the market.

Security-Constrained Dispatch andNodal Pricing

To determine the prices for products tradedon the wholesale market, offers made bygenerators and ILs are matched with thesystem demand forecast and system securityrequirements. The MCE produces a security-

constrained economic dispatch by takinginto account the:• available generation capacity;• ability of generation capacity to

respond (ramping);• relationship between the provision

of energy, reserve and regulation(co-optimisation);

• power flows in the system;• physical limitations on the flows that

can occur in the transmission system;

Description Purchaser Seller

Energy Generated electricity Retailers Generators

Reserve Stand-by generation capacity or IL that canbe drawn upon when there is an unforeseen

shortage of supply. Three classes of reserveare traded:

1) primary reserve (8-second response)2) secondary reserve (30-second response) and3) contingency reserve (10-minute response)

Generators Generators,Retailers

andWholesalers

Regulation Generation that is available to fine-tune thematch between generation and load

Generatorsand Retailers

Generators

• losses that are incurred as power istransported; and

• constraints in relation to systemsecurity.

This process is run every half-hour todetermine the:• dispatch quantity that each generation

unit is to produce;• reserve and regulation capacity that

each generation unit is required tomaintain;

• level of IL that is required; and• corresponding prices for energy,

reserve and regulation in thewholesale market.

Energy prices – referred to as nodal prices– vary at different points on the network.

The differences in nodal prices reflectboth transmission losses and the physicalconstraints of the transmission system. Thismeans that the true costs to the market ofdelivering electricity to each point on theelectricity network are revealed.

The MCE models the transmission networkand uses linear and mixed integerprogramming to establish demand andsupply conditions at multiple locations(nodes) on the network. Modelling ensuresthat market transactions are structured in

a way that is physically feasible given thecapacity and security requirements of thetransmission system. For each half-hourtrading period, the MCE calculates theprices to be received by generators at the53 injection nodes, and the prices at upto 733 withdrawal or off-take nodes 3 thatare used as the basis for the price to bepaid by customers. This method of pricedetermination encourages the economically-efficient scheduling of generation facilities

in the short term and provides incentives toguide new investment into the power system

infrastructure in the long term.

EMC uses metered demand and generationfrom the MSSL and market prices to settlemarket transactions on a daily basis.Generators receive the market price forenergy that is determined at their pointof connection to the transmission network(injection node). Retailers pay the UniformSingapore Energy Price (USEP) for energy,which is the weighted-average of the nodalprices at all off-take nodes.

Generators pay for reserve accordingto how much risk they contribute to thesystem. Regulation is paid for by retailersin proportion to their energy purchaseand by dispatched generators up to aceiling of 5 megawatt hours for eachtrading period.

Near Real-Time Dispatch

Market prices and dispatch quantitiesfor energy, reserve and regulation arecalculated five minutes before the startof each half-hour trading period. Thisensures that the market outcomes reflectthe prevailing power system conditions andthe most recent offers made by generators.The result of near real-time calculation ofdispatched generation quantities ensures aslittle real-time intervention as possible, andhence minimal deviation from a competitivemarket solution.

To support near real-time dispatch, EMCproduces market forecast schedules upto a week ahead of the relevant tradingperiod. These forecast schedules increase infrequency as the trading period approachesto ensure that MPs have the informationthey need to adjust their trading positionsprior to physical dispatch.

3 Numbers of injection and withdrawal nodes are as of31 December 2013.

MARKET OVERVIEW: Market Features

CONTENTS



MARKETGOVERNANCE



Governing Documents andInstitutions

The Energy Market Authority (EMA) wasestablished under the Energy MarketAuthority of Singapore Act 2001. The EMA

is the electricity market regulator under theElectricity Act 2001 and is responsible for,among other mandates:• creating the market framework for

electricity and gas supply;• promoting development of the

electricity and gas industries;• protecting the interests of consumers

and the public;• issuing licences; and• advising the Government on

energy policies.

Rule Change Process

The day-to-day functioning of the NationalElectricity Market of Singapore (NEMS)wholesale market is governed by theSingapore Electricity Market Rules.

The rule change process is the responsibilityof the Rules Change Panel (RCP). Appointedby the Energy Market Company (EMC)Board, RCP members represent generators,retailers, wholesale market traders, thefinancial community, the Power SystemOperator (PSO), the Market SupportServices Licensee (MSSL), the transmissionlicensee, electricity consumers and EMC,ensuring representation by all the keysectors of the industry.

The rule change process is designed tomaximise transparency and opportunitiesfor public involvement. Rule modificationsrecommended by the RCP require thesupport of the EMC Board and the EMA.When approving changes to the MarketRules, the EMA is required to considerwhether the proposed rule modifications(i) unjustly discriminate in favour of oragainst a market participant (MP) or aclass of MPs; or (ii) are consistent with thefunctions and duties of the EMA under

subsection 3(3) of the Electricity Act. Each year, the RCP establishes and publishesits work plan to ensure that stakeholdersremain informed about the likely evolutionof the market. The work plan can be foundat www.emcsg.com.

Market Surveillance and Compliance

The Market Surveillance and CompliancePanel (MSCP), comprising professionalsindependent of the market, is responsiblefor monitoring, investigating and reporting

the behaviour of MPs and the structuralefficiency of the market. The panel identifiesmarket rule breaches and assesses marketoperations for efficiency and fairness.In circumstances in which the MSCPdetermines that an MP is not compliant withthe Market Rules, it may take enforcementaction, which may include levying apenalty. The MSCP also recommendsremedial actions to mitigate any rulebreaches or inefficiencies identified. Thepanel produces the MSCP Annual Report,

which has been published together withthe NEMS Market Report since 2007.

Dispute Resolution

The Market Rules contain a process thatfacilitates the resolution of disputes betweenMPs and service providers. The disputeresolution process is designed to be a

cost-effective way of resolving disputes andpreserving market relationships by avoidingcourt proceedings. This process is managedby the Dispute Resolution Counsellor (DRC).

MARKET GOVERNANCE: Overview

CONTENTS



like to express my appreciation to Mr Lowfor his contributions in the past one and ahalf years.

The success of the rules change processwould not have been attainable withoutthe following people: our EMA regulatorsand the EMC Board for their collaborativeefforts in assessing the rule changes; marketparticipants for providing their commentsand suggestions; and EMC’s MarketAdministration Team for their assiduousefforts and analytical support on rulechange proposals. I thank them for theircommitment and for making 2013 anothersuccessful year.

Dave CarlsonChairRules Change Panel

The wholesale market operations of theNEMS are governed by the SingaporeElectricity Market Rules. The Market Rulesconstantly evolve to ensure that they stay

relevant amidst policy and market changesin the electricity landscape.

Championing the evolution of the MarketRules is the Rules Change Panel’s (RCP)mandate. The RCP re-prioritises its workplan annually to ensure that the mostimportant and urgent issues are tackledfirst. To further enhance the relevance ofthe work plan, starting from 2014, industrymembers will be allowed to submit urgentissues that they wish to incorporate into thework plan midway through the financial year.

This year, a major theme among issueson the RCP’s agenda involved refinementsto the market clearing engine (MCE).The MCE is central to the workings of theNEMS, balancing economic efficiency with

system security considerations. Given itssignificant role in determining schedulesand prices, the RCP paid exceptional carein examining every proposed refinement

to the MCE’s formulation. In the processof tackling these issues, I believe allPanel members have benefitted from agreater understanding and appreciationof the complex formulation underpinningthe market.

Beyond establishing potential benefits fromthe proposed enhancements, robust cost-benefit analyses often feature prominentlyin the Panel’s decision-making process.For example, one enhancement soughtto introduce a new algorithm to reducenon-physical losses, which occur whenenergy prices are negative. While the Panelrecognised that the proposed methodologywas an improvement, it decided to hold offany changes given the low frequency ofnegative energy prices in the market.

Many of the issues tackled required abalance of somewhat divergent viewsand objectives. A case in point was theproposal to revise prices when generators

failed to revise their offers following forcedoutages. Such failures to revise offers haveserious commercial and system securityimplications. Although the revision of pricesduring such cases would reinstate theright price signals, they could be unfair toconsumers whose consumption decisionshave already been made.

I am proud to partake in the constructivedebates when evaluating rule changes,and grateful to my fellow Panel membersfor their diligence, dedication andprofessionalism.

On the membership front, we welcomedFrances Chang this year as she replacedLow Cheong Kee to represent electricityconsumers. On behalf of the Panel, I would


MARKET GOVERNANCE: Letter from the Chair, Rules Change Panel

CONTENTS



Rule Changes Supported bythe RCP

The following rule changes were discussedand approved, as part of the RCP’scontinual efforts to guide the evolution of

the wholesale electricity market.

Review of Constraint Violation Penalties

The market clearing engine (MCE) seeksto achieve the most economical schedulingoutcome while simultaneously satisfying manyconstraints. Where the MCE is unable tomeet all of these constraints, some violationsare allowed to ensure that a feasiblescheduling outcome is still possible. However,such violations impose an associated cost

to the overall net benefit, known as theconstraint violation penalty (CVP).

The CVP structure was reviewed followingan observation during a contingencyevent when the MCE channelled availablegeneration resources to supply reserverather than energy, even in an energydeficit situation.

After examining the level of energy deficitsincurred and the proportion of reserverequirement met under various solutions, arule change was implemented to introducestepwise CVP for reserve and regulationdeficits, with increasing severity of violationincurring a higher CVP per unit of violation.This will divert resources to address energyneeds and reduce energy deficits, whileensuring that a core amount of eachancillary service is procured to maintainsystem security.

Remodelling of Mixed Integer Program-Based Regulation Constraints

The energy output of a generator must bewithin its operational regulation range inorder to provide regulation. However, using

linear programming-based constraints tomodel a generator’s regulation range canprevent it from being scheduled for energybeyond its regulation range, even if it is notscheduled to provide regulation.

To resolve this, Mixed Integer Program(MIP)-based regulation constraints wereintroduced in 2007. As there were initialconcerns about the time needed for theMCE to find a solution, these MIP-basedregulation constraints were used onlywhen deemed necessary, i.e., only when agenerator was “trapped” at the boundariesof its regulation range during a normallinear programming run. However, it wasobserved that if MIP-based regulationconstraints were only applied for “trapped”cases, the MCE might produce sub-optimalschedules under certain circumstances.

A rule change was thus made to applyMIP-based regulation constraints at alltimes, regardless of whether any regulationprovider was “trapped”, and to reformulate

the existing MIP-based regulation constraintsby using fewer variables and constraints todefine the same solution space.

Publication of Total AvailableOffer Capacity

EMC releases the total available energyoffer capacity data for a given real-timedispatch run to MPs. A proposal sought

to publish the same aggregated data foreach product (energy, regulation and threeclasses of reserve) across both real-timeand forecast schedules.

While publishing the data could bringbenefits like greater transparency andcredibility, it could also adversely impactthe market by facilitating the potentialexercise of market power. To determinethe potential for capacity withholding, thepivotal supplier test, which is commonlyused in other jurisdictions, was conductedon energy and regulation data in theSingapore Wholesale Electricity Market(SWEM). EMC concluded that pivotalsuppliers do exist in selected periods, andthe publication of total available offercapacity for energy and regulation mayfacilitate capacity withholding.

Nevertheless, the RCP supported theproposal to publish the total availableoffer capacity for all products across allschedules given that:

• market power risk is likely to reducewith new capacity entering themarket in 2013; and

• publication of data will enhanceefficiencies in the upcoming electricityfutures market and demand responseinitiatives spearheaded by the EMA.

A final decision on this rule changeproposal is expected in 2014.

Rule Changes Not Supported bythe RCP

The RCP also discussed the followingproposals but decided not to support them,either because the current arrangement was

deemed to be more appropriate, the timingwas not right for implementation, or thepotential benefits did not justify the costs.

Adjustment of Recovery and Refund ofPayments for Partial Provision of AncillaryServices

Previously, a rule change was implementedto ensure that non-providers of ancillaryservices that were identified before thepreliminary settlement statement was posted

would not be paid.

Given the PSO’s review of reserve providergroups and changes to the reserveeffectiveness factor, a proposal suggestedthat non-payment of reserve should onlyapply when no reserve was provided atall (i.e., full failure), while payment for theprovision of partial reserve should remain.According to the proposal, this would avertthe issue of a “double” penalty, and ensurethat reserve provision would be paid basedon what was actually provided.

However, as partial provision cases posesystem security risks, it was assessed andconcluded that such cases should not bepaid at all. Therefore the RCP decided notto support the proposal.

Market Governance: Market Evolution

CONTENTS



Proposed Provision for Price Revision whenGenerating Units Fail to Revise their Offersin Good Faith

Generators are obligated to revise theiroffers during forced outages, so that the

offers considered by the MCE are thebest reflection of their revised physicalcapabilities. However, during an episodeon 13 December 2011, energy offerswere not revised following a sequenceof forced outages, and it resulted in theMCE scheduling generators that werephysically unable to generate4. This notonly compromised system security but alsoartificially suppressed the prices for energy,reserve and regulation, thereby failingto accurately reflect the physical scarcityfaced by the market.

It was proposed that prices be revised insuch cases, as such a move:• preserved the price signal integrity for

long-term decision making;• was more financially equitable to

the producers by ensuring that theyreceived settlement paymentsequivalent to what they should havereceived in the first place; and

• removed the financial incentive forMPs to keep prices suppressed if they

were exposed to spot prices.

The main argument against price revision,however, was that it was unfair to chargeconsumers a higher ex-post price forquantities consumed based on ex-anteprices, as they would not have had achance to respond during the affected

period(s) by reducing their consumption.After much debate and deliberation, theprice revision proposal was not supported,but the RCP requested that the frequencyof occurrence of any future similar incidentsbe monitored.

Proposed Rejection of Offers with ZeroRamp Rates

As part of their energy offer submission,generation registered facilities (GRFs)can specify ramp-up and ramp-downrates that are lower than those in theirstanding capability data. This accords MPsthe flexibility to de-rate their generatorsto better reflect their GRFs’ physicalcapabilities. However, when zero ramp-up/down rates are of fered, either of thefollowing two scenarios would result:• the GRF in question will be scheduled

at its start generation level regardlessof its actual energy offer price, andwill not take part in the price discoveryprocess, or

• ramp rate violation will be incurred.

Given the undesirable market outcomes oferroneously submitted zero ramp rates, anoffer validation rule was proposed to beintroduced to prevent zero ramp rates frombeing offered, unless the maximum energyramp-up and ramp-down rates in the

standing data are both zero.

Nevertheless, some MPs have indicated thatthey preferred the flexibility of using zeroramp rates in their offers. The proposedoffer validation rule of disallowing zeroramp rates is also inconsistent with themarket design principle of self-commitment,whereby MPs are responsible for their ownoffers. As such, the proposal to disallowzero ramp rates in the energy offers wasnot supported.

Proposed New Constraint for HandlingNon-Physical Losses

To serve a given level of forecast demand,the MCE will schedule generation such thatthe overall production cost is minimised,thus maximising the net benefit (which isthe benefit of serving the forecast demandless the production cost).

To minimise production cost, generationoutput and transmission losses have tobe correspondingly minimised. This is truewhen energy prices are positive. However,when energy prices are negative, theMCE increases the modelled losses as

higher losses increase the amount ofgeneration required, leading to a lowerproduction cost and higher net benefit. Todo so, the MCE uses linear segments thatare poor approximations of actual losses.The differential between the good and poorapproximations is termed Non PhysicalLosses (NPL), which is e ssentially amodelling error that compromises accuracyin transmission modelling and energydispatch. Currently, the MCE adopts aniterative process to reduce the NPL to belowan acceptable threshold prior to publishingthe dispatch schedules.

It was proposed that an enhancement,the “loss ceiling method”, be implementedto accelerate the convergence of theiterative procedure by capping the totalloss (physical loss and NPL) to an estimatedvalue. Although it was found that amodification of the original proposal wouldachieve better performance and optimality,the proposal was not supported due to thelow frequency of negative prices – and

thus the actual number of real-time dispatchperiods – that will be affected by NPL.

Market Governance: Market Evolution

4 This specific case was referred to the MSCP forinvestigation at that time and enforcement action wastaken. Refer to the MSCP Annual Report 2012 for details.

CONTENTS




Dispute Resolution andCompensation Panel

The Dispute Resolution and Compensation

Panel (DRCP) was established under theMarket Rules to provide dedicated disputeresolution services to the NEMS whenrequired.

DMS Contacts

Pursuant to the Market Rules, each marketentity has nominated at least one Dispute

Management System (DMS) contact to bethe first point of engagement in the eventof a dispute.

The current DMS contacts are:

1. Air Products - Tang Siew Wai

2. Diamond Energy - Muhammed Iqbal

3. Energy Market Company- Abdul Aziz Yatim

4. ExxonMobil - Elaine Lee

5. ExxonMobil - Teddy Yong

6. GlaxoSmithKline - Chew Siou Ping

7. GlaxoSmithKline - Wong Joon Jee

8. Green Power Asia - Daniel Ma

9. Keppel Electric - Janice Bong

10. Keppel Electric - Joelyn Wong

11. Keppel Merlimau Cogen - Sean Chan

12. Keppel Merlimau Cogen- Tini Mulyawati

13. National Environment Agency- Siew Weng Soon

14. National Environment Agency- Teresa Tan

15. PacificLight Power - Calvin Tan

16. PacificLight Power - Linda Wen

17. Pfizer - Lee Chin Hoo

18. Pfizer - Tan Meng Tong

19. Power System Operator - Agnes Tan

20. Power System Operator - Yong Thi Yen

21. Sembcorp Cogen - Ramesh Tiwari

22. Sembcorp Power - H C Chew

23. Senoko Energy - Eu Pui Sun

24. Senoko Energy - Eveline How

25. Senoko Energy - Ho Poey Ee

26. Senoko Energy - Michelle Lim

27. Seraya Energy - Daniel Lee

28. Seraya Energy - Elaine Syn

29. Singapore Oxygen Air Liquide- Lim Yong Yi

30. SP Power Assets - Chan Hung Kwan

31. SP Power Assets - Ong Sheau Chin

32. SP Services - Budiman Roesli

33. SP Services - Lawrence Lee34. Tuas Power Generation - Philip Tan

35. Tuas Power Generation - Priscilla Chua

36. Tuas Power Supply - Jazz Feng

37. Tuas Power Supply - Zhang Ai Jia

38. YTL PowerSeraya - Jonathan Chew

39. YTL PowerSeraya - Mark New

As part of my responsibilities, I help toprovide training in dispute resolution and

the Market Rules for the DMS contacts.

On 1 November 2013, I conducteda workshop for the newly-appointedDMS contacts to give them a betterunderstanding of the market’s disputeresolution process. At this workshop, theyalso met with the other DMS contacts.

MARKET GOVERNANCE: Letter from the Dispute Resolution Counsellor

CONTENTS



13

Conclusion

I thank the DRCP members and DMScontacts for their contributions, and look

forward to continuing to support the disputeresolution needs of all NEMS market entitiesin the coming year.

George LimSenior CounselDispute Resolution Counsellor

DRCP Members

The DRCP members are:

Mediation Panel1. Chandra Mohan

2. Daniel John

3. Danny McFadden

4. Geoff Sharp

5. Associate Professor Joel Lee

6. Associate Professor Lim Lei Theng

7. Dr Peter Adler

8. Robert Yu

9. Shirli Kirschner

MARKET GOVERNANCE: Letter from the Dispute Resolution Counsellor

Arbitration Panel

1. Ang Cheng Hock, Senior Counsel

2. Chelva Rajah, Senior Counsel

3. Giam Chin Toon, Senior Counsel

4. Gregory Thorpe

5. Harry Elias, Senior Counsel

6. Kenneth Tan, Senior Counsel

7. Professor Lawrence Boo

8. N Sreenivasan, Senior Counsel

9. Naresh Mahtani

10. Philip Jeyaretnam, Senior Counsel

11. Phill ip Harris

12. Raymond Chan

13. Dr Robert Gaitskell, Queen’s Counsel

14. Tan Chee Meng, Senior Counsel

15. Professor Tan Cheng Han,Senior Counsel

CONTENTS



14

MARKETPERFORMANCE



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Annual Electricity Consumption 2009 – 2013

Electricity consumption increases across all quarters compared to 2012

Electricity purchased by market participants(MPs) is settled using electricity consumption

data provided by the Market SupportServices Licensee (MSSL).

Electricity consumption increased by2.4 percent from 2012, climbing to 45.2

terawatt hours (TWh) in 2013. The strengthof electricity consumption was observedthroughout the year as there waspositive year-on-year (YOY) growth in allfour quarters. The largest YOY changewas in the third quarter, when electricityconsumption was 5.0 percent higher thanit was in the third quarter of 2012.

Q1 Q2 Q3 Q4 YOY Growth

MARKET PERFORMANCE: Overview of the Year

50

40

30

20

10

0

TWh

2009 2010 2011 2012 2013

Q4

Q1

Q2

Q3

39.0

42.443.0

44.245.2

10

8

6

4

2

0

YOY Growth (%)

CONTENTS



16


Generation Capacity as of 31 December 2013:Registered Versus Licensed

As more generation companies reach their licensed capacity 5,further EG and CCGT capacity is planned

The licensed capacity in the NationalElectricity Market of Singapore (NEMS)rose from 13,923 megawatts (MW) in 2012to 14,049MW as of 31 December 2013.The new licensed capacity in 2013 wasapproved for Shell Eastern Petroleum

(under the Embedded Generators above10MW category) and TP Utilities.

Deducting the registered capacity of12,422MW in the market from the totallicensed capacity in 2013, gives anindication of a potential 13.1 percentadditional or 1,627MW of incomingcapacity. The majority of this is expected inthe next two years. This incoming capacityis slated to be in the CCGT/cogen/trigen

category, which encompasses the mostefficient generation technologies in the NEMS.

In 2012, the proportion of the total registeredcapacity to licensed capacity was 77.6percent. This has improved in 2013 to 88.4

percent, as more generation companiesapproach their full licensed capacity.

5 Licensed capacity calculated from the Energy MarketAuthority’s data and Schedule A published on its websiteas of 1 Januar y 2014.

CCGT/cogen/trigen = Combined-cycle gas turbine/cogeneration/trigeneration (combined category)ST = Steam turbineGT = Gas turbine

Embedded generators (EG) = Generation units thatgenerate electricity to their onsite load principally forself consumption.

CCGT/Cogen/Trigen ST GT Licensed Capacity

Annual Generation Supply by Plant Type 2009 – 2013

Generation supply reaches new height in 2013 with CCGT/cogen/trigenhitting double-digit growth

The CCGT/cogen/trigen supply grew by13.2 percent in 2013, which is the biggest

yearly increase since the start of themarket. For the third consecutive year, theCCGT/cogen/trigen supply exceeded t heforecasted demand. The margin by which

the CCGT/cogen/trigen supply surpassedthe forecasted demand was 24.7 percentin 2013, up from 10.6 percent in 2012.

The ST supply continued on its downwardtrend, dipping 8.7 percent from 2012 andfalling below 500MW for the first time. TheGT supply was 0.5 percent lower in 2013.

Growth of the CCGT/cogen/trigen supplyoutweighed the decline in the ST and GTsupply, resulting in a new record highfor total generation supply in 2013. Thegeneration supply in 2013 broke throughthe 7,100MW mark, registering a 4.0

percent improvement over 2012.

Average generation supply was 60.8percent of the average registered capacityin 2013, down from 64.2 percent in 2012.Relative to registered capacities by planttype, the CCGT/cogen/trigen supply wasat 70.1 percent while ST supply was at13.4 percent in 2013.

MW 3,500

3,000

2,500

2,000

1,500

1,000

500

0PacificLight

PowerKeppel

MerlimauCogen

YTLPowerSeraya

SembcorpCogen

SenokoEnergy

Tuas PowerGeneration

TP Uti li ties Tuaspring Incinerat ionPlants

EmbeddedGenerators≥10MW

Generators<10MW

MW 7,000

6,000

5,000

4,000

3,000

2,000

1,000

02009 2010 2011 2012 2013

Forecasted DemandST GTCCGT/Cogen/Trigen

CONTENTS



17

Annual USEP and Ancillary Prices 2009 – 2013

In 2013, the annual average UniformSingapore Energy Price (USEP) was$173.24 per megawatt hour (MWh).This was a 22.1 percent decrease from2012. The drop was driven by record highgeneration supply and was in line with

lower high sulfur fuel oil (HSFO6) prices.This was the first year since 2009 thatrecorded a decline in the USEP from thepreceding year, and the fall is the largest

year-on-year (YOY) percentage drop sincethe market started. Nevertheless, the USEPwas the third highest since 2003.

The USEP settled below the vesting contractprices7 throughout most of the year. Themonthly USEP did, however, surpass thevesting contract prices in June and Augustdue to dips in the generation supply.

The primary and secondary reserveprices increased from $0.46/MWh and$1.91/MWh in 2012, to $1.50/MWh and$3.10/MWh respectively in 2013. This waslargely due to a shifting of reserve offersinto higher price tranches. Recovering froma year in which tight supply conditions

triggered seven periods of contingencyreserve shortfall, the contingency reservemarket eased significantly in 2013. Aidedby a boost in the contingency reservesupply, the contingency reserve price fellfrom $15.89/MWh in 2012 to an average

of $9.12/MWh in 2013. This is the first timethat the average annual contingencyreserve price has dipped below $10/MWhsince 2008.

The regulation price also eased from 2012,down 13.1 percent to $79.52/MWh.

This was attributed to an increase in theregulation supply and the higher proportionof cheaper offers8 in 2013, which overcamea 31.4 percent rise in the regulationrequirement volume.

Greater supply lowers energy, contingency reserve and regulation prices

6 Based on HSFO 180 CST price which is used as aproxy for fuel price.

7 Vesting contract prices refer to the Vesting ContractHedge Price (VCHP) from 1 January to 30 June 2013,and the Balance Vesting Price (BVP) and LNG VestingPrice (LVP) from 1 Jul y to 31 December 2013.

8 Higher proportion of offers in the offer tranche below$30/MWh.

$/MWh

2009 2010 2011 2012 2013


250

200

150

100

50

0USEP Primary Reserve Secondary Reserve Contingency Reserve Regulation

CONTENTS



18

Annual Value of Products Traded 2009 – 2013


Total products traded falls by more than $2 billion from 2012

In 2013, the annual value of productstraded in the NEMS sank to the lowest levelin the past three years. The total value ofproducts traded in 2013 was 20.1 percentlower than 2012, settling at $8.7 billion.This was mainly attributed to the contracting

value of the energy market, which shrunkby 20.0 percent from 2012 due to the fallin the USEP more than offsetting the growthin the forecasted demand. The ancillarymarkets recorded smaller changes in 2013,with the reserves market dipping 0.3 percentand the regulation market rising 0.1 percent.

For 2013, the energy market accounted for98.3 percent of the value of all productstraded, while the reserve and regulationmarkets accounted for 0.7 and 1.0 percentrespectively.

CCGT/cogen/trigen market share continues upward trend

The CCGT/cogen/trigen market sharereached a new height in 2013, averaging94.3 percent. While the market shareexceeded the 90 percent mark for twomonths only in 2012, it surpassed thisthreshold every month in 2013. Starting

the year at 91.3 percent in January, theCCGT/cogen/trigen market share jumpedto 2013’s highest monthly average of 95.7percent in February. It then drifted between93.0 and 95.5 percent for the remainder ofthe year.

After the annual CCGT/cogen/trigenmarket share plateaued at around 80.0percent between 2007 and 2011, itrestarted growing at a rate similar to the

early years of the market. With the recordCCGT/cogen/trigen supply outpacingthe forecasted demand growth in 2013,a third consecutive year of increasingCCGT/cogen/trigen market share hasbeen observed. Conversely, the annual ST

market share more than halved from 2012,shrinking below 10 percent for the first timesince the market started.

The average CCGT/cogen/trigen supplywas more than sufficient to cover theforecasted demand in 2013. The ST marketshare was mostly contributed by theincineration plants and the running of theseunits is typically motivated by non-pricerelated drivers.

Annual Market Share by Plant Type 2003 – 2013

ST GTCCGT/Cogen/Trigen

Market share is computed based on scheduled generation.

Note: The percentages in this chart may not add up to 100% due to rounding.

$ Billion

12

10

8

6

4

2

02009 2010 2011 2012 2013

6.46

8.71

10.90

9.72

7.99

100

80

60

40

20

02003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

60.7

39.3

94.3

5.7

86.2

13.8

81.5

18.4

79.5

20.5

81.4

18.5

81.5

18.5

79.0

21.0

78.0

22.0

75.0

24.9

67.7

32.3

%

CONTENTS



19

MARKET PERFORMANCE: Energy Demand

Monthly Forecasted Demand 2009 – 2013

Forecasted demand registers positive YOY growth for most months

Forecasted demand is the projectedelectricity consumption in the NEMS. The

forecasted demand is provided in real-timeby the Power System Operator (PSO) and isa key component in de termining the USEP.

Comparing YOY, forecasted demand wasstronger for all months except February.Overall, the forecasted demand rose 2.8percent in 2013.

One significant event that impacted theforecasted demand in 2013 was the hazethat affected several countries in SoutheastAsia. With record high Pollutant Standard

Index (PSI)9 readings registered in June, thehaze likely prompted the higher forecasteddemand that month as the usage of air-conditioning units increased. Nevertheless,the forecasted demand in June 2013 onlyrose 2.4 percent over June 2012, beingthe same average increase in electricityconsumption seen for the whole of 2013.

While the highest monthly forecasteddemand has consistently occurred around

the middle of the year for the past five years, October recorded the peak monthlyforecasted demand for 2013 at 5,469MW.The high forecasted demand in Octoberwas consistent with signs of a strengtheningeconomy, as seen in the PurchasingManagers’ Index (PMI)10 which indicated aboost in Singapore’s manufacturing activityin the same month.

The peak forecasted demand for 2013occurred in Period 29 on 25 June. At6,613MW, it surpassed the 2012 peak

of 6,386MW.

9 The 3-hour PSI is a measure of pollution levelsin Singapore, and is published by the NationalEnvironment Agency (NEA).

10 The PMI is a monthly measure of Singapore’smanufacturing economy and is published by theSingapore Institute of Purchasing and MaterialsManagement (SIPMM).

Five-Year Average for June

MW

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

5,600

5,400

5,200

5,000

4,800

4,600

4,400

4,200

4,000

CONTENTS



20

MARKET PERFORMANCE: Energy Supply

Generation Facilities Registered and De-registered in 2013

At the end of 2012, there was 10,810MW of registered capacity in the NEMS.Subsequently, five new facilities registered with the market in 2013 under existingMPs Keppel Merlimau Cogen and Tuas Power Generation, as well as new entrantsGlaxoSmithKline Biologicals and PacificLight Power11.

CCGT/cogen/trigen registered capacity soars above 9,400MW, while ST registered capacity remains stagnant against 2012

Market Participant Generation Type Registered Capacity

Keppel Merlimau Cogen 1 CCGT cogeneration unit 410MW

GlaxoSmithKline Biologicals 1 cogeneration unit 1.9MW

Tuas Power Generation 1 CCGT unit 405.9MW

PacificLight Power 2 CCGT units 800MW

ISK19 Nov 2013

1 ST unit


D e - r e g i s t e r e d

R e g i s t e r e d Keppel

Merlimau Cogen

3 Jan 20131 CCGT

cogen unit

GlaxoSmithKlineBiologicals

7 May 20131 cogen unit

Tuas PowerGeneration

27 May2013

1 CCGTunit

PacificLight Power18 Jun and

26 Aug 20132 CCGT units

The de-registration of ISK Singapore

from the NEMS resulted in the loss ofa 9.6MW facility in November 2013.

As all the new facilities fell into theCCGT/cogen/trigen classification, theregistered capacity of this categoryincreased 20.4 percent from 2012 to9,430MW. Overall, the total registeredcapacity increased by 14.9 percent to12,422MW in 2013, out of which 76.0percent was CCGT/cogen/trigen, 22.6percent ST and 1.4 percent GT.

Of the registered capacity as at

31 December 2013, 26.1 percent belongedto cogeneration and trigeneration facilitieswhich are able to produce steam and/orchilled water in addition to e lectricity. Thisproportion was slightly lower than 2012(26.3 percent), as the increase in totalregistered capacity in 2013 was mostlyof the CCGT type.

11 In 2013, YTL PowerSeraya also de-registered anST unit in April, which was later re-registered in June.

CONTENTS



21


Monthly Energy Offer Price Proportion and HSFO Price 2013

More energy offers priced below $200/MWh as fuel price12 eases

In 2013, the monthly percentage ofenergy offe rs priced below $200/MWhranged from a low of 77.6 percent in Apriland May, to a high of 82.6 percent inNovember. For the year, this percentageincreased from 74.1 percent in 2012 to79.1 percent in 2013. This was due to ashifting of energy offers away from thehigher-priced tranches, particularly the$200/MWh to $400/MWh tranche.

Higher fuel prices tend to depress cheaperenergy supply (the proportion of offersbelow $200/MWh). The growth in thecheaper energy offers in 2013 is in line withthe average HSFO price falling 7.2 percentfrom 2012. The average HSFO price wasUS$671.48 per metric tonne (MT) in 2012,and settled at US$623.46/MT in 2013.

12Based on HSFO 180 CST price which is used as aproxy for fuel price.

HSFO

<$100/MWh ≥$100/MWh and <$150/MWh ≥$150/MWh and <$200/MWh

≥$400/MWh≥$200/MWh and <$400/MWh

Monthly Generation Maintenance 2012 Versus 2013

Generation maintenance higher at the start and end of the year

Generation maintenance levels13 decreased14.9 percent in 2013 to an average of877MW. Compared to 2012, generationmaintenance was lower in 2013 for allmonths between February and October,

and in December.

The scheduling of more generationmaintenance in the months of January,November and December seems to beconsistent with the notion of planningmaintenance when forecasted demandis projected to be lower.

The average ratio of generation maintenanceto registered capacit y dipped to 7.5 percentin 2013 from 9.6 percent in 2012. Thiswas due to the fall in annual generationmaintenance combined with the increase

in registered capacity in 2013.13Generation maintenance levels are calculated basedon the annual generation overhaul program (AGOP)provided by the PSO.

2012 2013 Average for 2012 Average for 2013

1,500

1,200

900

600

300

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MW Offer price proportion (%) HSFO (US$/MT)


100

80

60

40

20

0

750

700

650

600

550

CONTENTS



22


Monthly Utilisation Rate by Plant Type 2013

Utilisation rates for CCGT/cogen/trigen and ST plant types down for second consecutive year

Monthly ST Utilisation Rate 2013

Monthly CCGT/Cogen/Trigen Utilisation Rate 2013

Utilisation Rate (%)

80

70

60

50

40

30

20

10


Average Annual ST Utilisation Rate 2013

Average Annual ST Utilisation Rate 2012 Average Annual CCGT/Cogen/Trigen Utilisation Rate 2012

Average Annual CCGT/Cogen/Trigen Utilisation Rate 2013

The utilisation rate measures the scheduledenergy as a percentage of registeredcapacity.

In 2013, the monthly CCGT/cogen/trigenutilisation rate ranged between 53.6

percent and 63.9 percent, with Aprilregistering the highest utilisation rate.The CCGT/cogen/trigen utilisation ratewas higher at the beginning of the year,but began to decline after May. This wasassociated with the introduction of threeCCGT/cogen/trigen units between lateMay and late August, which lifted the

CCGT/cogen/trigen registered capacitysignificantly. In addition, these units were notalways dispatched to their full capacities,particularly during the commissioning phase.In November and December, the drop in theCCGT/cogen/trigen utilisation ra te resulted

from the easing of the forecasted demandat year end.

The monthly ST utilisation rate rangedbetween 7.2 percent and 14.7 percent,with January registering the highestutilisation rate.

Overall, the utilisation rate forCCGT/cogen/trigen dipped from63.4 percent in 2012 to 58.4 percent in2013. The decline in the utilisation rate isconsistent with the commissioning activitiesof the CCGT/cogen/trigen units entering

the market in 2013. For ST, the utilisationrate decreased from 20.1 percent in 2012to 10.2 percent in 2013, in line with thesmaller ST generation supply. This isthe second consecutive year of fallingCCGT/cogen/trigen and ST utilisation rates.

CONTENTS



23

Monthly USEP, VCHP, BVP, LVP and Supply Cushion 2013

USEP mostly below $180/MWh due to stronger supply cushion14 VCHP USEPSupply Cushion BVP LVP

MARKET PERFORMANCE: Energy Prices

$/MWh Supply Cushion (%)


220

200

180

160

140

120

100

32

30

28

26

24

22

20

With the start of the Liquefied Natural Gas(LNG) Vesting Scheme in the third quarter

of 2013, a certain percentage of the totalallocated vesting quantity is pegged toLNG, i.e., Total Allocated Vesting Quantity= LNG Vesting Quantity (pegged to LNG)+ Balance Vesting Quantity (pegged topiped natural gas). Correspondingly, theLNG Vesting Price (LVP) is the price for theLNG Vesting Quantity allocated, while theBalance Vesting Price (BVP) is the price forthe Balance Vesting Quantity allocated.

In 2013, the monthly average USEPfluctuated between $147/MWh and$201/MWh. The difference of $54/MWh

is the narrowest in the past six years,reflecting decreased volatility in the energyprice compared to preceding years. Incomparison, the average VCHP in t he firsttwo quarters of 2013 was $196.59/MWh,and the average BVP for the last twoquarters of 2013 was $193.13/MWh.

Continuing the trend from the latter halfof 2012, the monthly USEP mostl y settledbelow the VCHP and BVP in 2013, exceptfor June and August. The largest differencesoccurred in the fourth quarter, when the USEPdropped to the lowest levels for the year.

The supply cushion in 2013 started offstrongly, reaching 27.5 percent in February.

This was due to the forecasted demandbeing pulled down by the Chinese NewYear holidays coupled with an increase inthe generation supply. When the supplycushion dipped below 25 percent in Juneand August mostly due to lesser supply,the average monthly USEP rose to around$200/MWh.

In November, the supply cushion droppedto 2013’s lowest level of 24.3 percent dueto the fall in generation supply exceedingthe drop in forecasted demand. Despitethe diminished supply cushion, the USEP

also eased slightly to $158/MWh. Thiswas because generation supply becamerelatively cheaper, with the percentage ofenergy offers priced below $200/MWhrising to the highest monthly level in 2013.The supply cushion then jumped to thehighest level for the year in December at29.0 percent, as a result of lower forecasteddemand in conjunction with a 3.5 percentgrowth in total generation supply. Withthe expansion of the supply cushion, theDecember USEP further declined to the lowestmonthly level for 2013, settling at $147/MWh.This is also the lowest that the monthly USEP

has reached since August 2010.14Supply cushion measures the percentage of totalgeneration supply that is available after matching offforecasted demand.

CONTENTS



24

Daily USEP, Forecasted Demand and Generation Supply 2013

$/MWh MW 500

400

300

200


8,000

7,000

6,000

5,000

4,000

Forecasted DemandGeneration Supply USEP


A E

F

D

G

C

B

CONTENTS



25

Energy prices more susceptible to fluctuations in CCGT supply amidst stronger forecasted demand


Point G:On 22 August, the daily USEP averaged$480/MWh. From Period 16 to 22, theCCGT and ST supplies were down from theprevious week, partially attributed to themaintenance of two CCGT units. Combinedwith a higher forecasted demand, the USEPwas pushed beyond $560/MWh to almost$800/MWh.

From Period 23 to 35, the ST supplyrecovered but the CCGT supply continuedto diminish further. The main reasonbehind this was the forced outage of oneCCGT unit in Period 21, which triggeredIL activation for Periods 21 to 23. During

these extremely tight supply conditions, thesupply cushion plunged below 10 percentfor three consecutive periods and the USEPwas propelled to $2,788/MWh in Period24, its highest level in 2013.

The key observations on some of the dailyspikes in the USEP in 2013 (higher than$300/MWh) are as follows:

Point A:On 24 February, the daily USEP averaged$315/MWh due to the half- hourly energyprices settling above $500/MWh for sevenperiods. During these periods, the supplycushion fell below 20.5 percent due toeither lower total supply combined with anincrease in forecasted demand, or the risein forecasted demand outpacing the growthin supply. The tight supply conditions wereexacerbated by an insufficient number ofregulation providers which caused a regulationshortfall of 0.38MW in Period 18. On this day,

one CCGT unit was on maintenance and GTwas scheduled for 18 periods.

Point B:On 13 April, the daily USEP averaged$307/MWh. The USEP se ttled above$500/MWh for 11 periods, reachinga peak of $733/MWh in Period 38.Contributing to the price spikes wasan increasing forecasted demand,accompanied by a significant drop-off inthe CCGT supply and a CCGT outage inPeriod 32. GT was scheduled for a total

of 12 periods.

Point C:On 20 June, the daily USEP averaged$358/MWh. The half -hourly USEP rangedbetween $553/MWh and $887/MWh

for 14 periods, during which the supplycushion plunged as low as 10.1 percent.The primary reason for the weak supplycushion was lower total supply amidst ahigher forecasted demand. The dip in thesupply resulted largely from a decline inthe CCGT component coinciding with oneCCGT unit being on maintenance andone CCGT forced outage in Period 14.Furthermore, the GT supply halved from thelevel of the preceding week during 11 ofthe 14 periods with p rice spikes. After theGT supply returned, GT was scheduled for

five periods.

On 21 and 22 June, t he daily USEPaveraged $375/MWh and $383/MWhrespectively. The energy prices registeredbetween $500/MWh and $550/MWh fortwo periods, and between $700/MWh and$800/MWh for 25 periods across the twodays. This was driven by a significant dropin the CCGT supply while the forecasteddemand inched up slightly, suppressing thesupply cushion down to an average of 15.5percent during the affected periods.

These three days of price spikescorresponded to the days that were mostaffected by the haze in June 2013, whenthe 3-hour PSI in Singapore reached recordhigh levels. The situation would havespurred greater usage of air-conditioningunits, thereby increasing the forecasteddemand. At the same time, the haze alsoimpacted generation supply. It resulted inseveral CCGT units offering less energy intothe market due to technical constraints.

Point D:On 17 August, the daily USEP averaged$332/MWh. For 13 periods, the USEPspiked above $530/MWh when the supply

cushion fell to an average of 16.4 percent.The lower supply cushion was attributedto two CCGT units being on maintenancewhich further pushed down the CCGTsupply, while the forecasted demand wasstronger. Additionally, one CCGT forcedoutage in Period 5 triggered interruptibleload (IL) activation for contingency reservein Periods 5 and 6. GT was scheduled for12 out of the 13 periods with price spikes.

Point E:On 19 August, the daily USEP averaged

$328/MWh. Despite the overall boostin the CCGT supply, considerably moreexpensive supply pushed the USEP above$600/MWh for 14 periods. During theseperiods, the average supply cushion was16.5 percent and GT was scheduled ineach period.

Point F:On 21 August, the daily USEP averaged$332/MWh. On this day, there were14 periods when the USEP rose above$530/MWh. While the CCGT supply was

pulled down by two units on maintenance,the ST supply compensated for this. Ingeneral, although the supply improvedslightly, the forecasted demand grew bya larger proportion. GT was scheduledwhen the supply cushion dipped below19 percent, for a total of 12 periods.

CONTENTS



26


Application of Security Constraints in 2013

In 2011, the Energy Market Authority (EMA)published a paper titled Developmentsin the Singapore Electricit y Transmission

Network 15

. This paper explained that therise in new generation facilities in upcoming years could lead to excess supply in thenetwork, particularly during the early yearsof these new plantings. In order to mitigatethis scenario, transmission constraints maybe needed to limit the amount of generationin certain areas of the system. One ofthese transmission constraints (or securityconstraints) would be imposed to limit thegeneration flow from Jurong Island to themainland of Singapore, as shown in thediagram on the left.

During 2013, the PSO applied a securityconstraint in the south-west 230kV blockof the transmission system for a total of9,747 periods, or 55.6 percent of the year.The constraint was applied intermittentlybetween March and June, and thencontinuously from late June until almost theend of the year. The constraint applied bythe PSO effectively limited the generationfrom more than half of the new plantingsof generators that took place in 2012 and2013. Of the 3,207MW of new generator

capacity installed in these two years,60 percent was affected by this securityconstraint.

230kV

400kV

230kV

230kV

Security Constraint Mainland

Jurong

Island

Each time the constraint was applied,the PSO specified the transmission linesthat were bound by the constraint, and

the maximum combined flow that can betransported along the specified lines (i.e.,the constraint limit). In 2013, the securityconstraint was most commonly applied totwo or three transmission lines at a time,with the constraint limit set at varying levelsbetween 600MW and 1,200MW.

Security constraint binding is the term usedwhen the combined generation flow on theconstrained transmission lines reaches theconstraint limit. In 2013, securit y constraintbinding was observed in 131 periods, or

1.3 percent of the total periods with thesecurity constraint applied.

Source: Annex C - Transmission constraints in the south-west 230kV block of the transmission network of theDevelopments in the Singapore Electricity Transmission Network paper by the Energy Market Authority.

15Sourced from EMA website (www.ema.gov.sg),policy paper #2 published on 5 April 2011.

CONTENTS



27


With the use of nodal pricing in the NEMS,each node in the transmission system willhave its own energy price. When security

constraint binding occurs, it can cause theprices at each end of a constrained line tobe quite different, a situation referred to asprice separation. Comparing the maximumand minimum nodal prices for the periodswith security constraint binding in 2013,almost half of those periods saw priceseparation of less than $10/MWh, and lessthan 4.0 percent was above $500/MWh.

The extent to which the maximum half-hourly MNN price diverged from theUSEP ranged f rom below $0.50/MWh

to above $680/MWh. For the minimum

Period with Security Constraint BindingSecurity Constraint Limit (MW)

Difference between Maximum MNN Price16 and MinimumMNN Price in periods with security constraint binding

Number of periods

≤ $10/MWh 62

> $10/MWh and ≤ $100/MWh 43

> $100/MWh and ≤ $500/MWh 21

> $500/MWh and ≤ $1,000/MWh 4

> $1,000/MWh 1

131

half-hourly MNN price, the variance fromUSEP spanned from $1.75/MWh to above$1,340/MWh. However, even if significant

price separation exists, as long as theprices accurately reflect the correct marketinput and the correct market modeling,the prices are deemed as final and usedfor settlement. In these cases of priceseparation, different prices are paid tothe generators. However, as the USEP is aweighted-average of the nodal prices at alloff-take nodes, a single price still applies forwholesale electricity consumed.

Security Constraint Limit (MW)

1,200

1,000

800

600

400

200

0

1-Mar 31-Mar 30-Apr 30-May 29-Jun 29-Jul 28-Aug 27-Sep 27-Oct 26-Nov 26-Dec

16Market Network Node prices.

CONTENTS



28

Monthly Primary Reserve Price, Requirement and Supply 2013

Primary reserve price rises at the back of more expensive offersOffer capacity at and above $5/MWhOffer capacity below $5/MWhRequirement

Price

MARKET PERFORMANCE: Ancillary Markets

MW $/MWh


500

375

250

125

0

6

5

4

3

2

1

0

In 2013, the monthly primary reserve

price mostly settled below $2/MWh.The highest price for the year wasrecorded in February, when the primaryreserve price averaged $5.59/MWh.There were two main drivers for the pricespikes in February. Despite more primaryreserve supply in February compared to

January, the offers were relatively moreexpensive17. Additionally, the primaryreserve requirement increased in February,partly due to the PSO’s revision of theRisk Adjustment Factor (RAF)18 forprimary reserve. The RAF was amended

to values between 1.02 and 1.44 dueto the commissioning activities of twoCCGT/cogen/trigen units, and appliedto 126 out of a total of 1,344 periods inFebruary. Prior to the RAF adjustments inearly 2013, the PSO had not amendedthe value since May 2010.

Subsequently, the primary reserve price

eased back to below $1/MWh in Marchat the back of lower requirement and growthin the primary reserve supply. In Mayand November, the primary reserve priceincreased when the requirement reachedtwo of the highest levels in 2013, and thesupply diminished and became slightlymore expensive.

Despite a 0.3 and 9.8 percent increasein the reserve requirement and supplyrespectively, the primary reserve pricewent up f rom $0.46/MWh in 2012 to

$1.50/MWh in 2013. This price rise waslargely attributable to higher priced primaryreserve supply in 2013 relative to 2012.

17Higher proportion of offers in the offer tranche above$5/MWh.

18There is a RAF for each class of reserve in the NEMS.The RAF is multiplied by the raw reserve requirement toarrive at the final reserve requirement that is cleared bythe market clearing engine (MCE). The PSO may amendthe RAF for any reserve class temporarily if it foreseespower system conditions that may warrant a higherreserve requirement than usual.

CONTENTS



29

Monthly Secondary Reserve Price, Requirement and Supply 2013

Higher prices in first half of the year push secondary reserve price to$3.10/MWh

The monthly secondary reserve price

generally followed a downward trend during2013. The price settled below $3/MWh formost months throughout the year, althoughthere were several months in the first half ofthe year which registered higher prices.

Although the secondary reserve requirementdeclined in January, the reserve supplyretracted by a greater magnitude. This,together with a shifting of the reserve offersinto higher priced tranches, drove thesecondary reserve price to its peak monthlylevel in 2013. The prices from February

to April eased as the secondary reservesupply grew stronger with each subsequentmonth. When this trend reversed in Mayand June, the prices rose to $5.83/MWh and$4.86/MWh respectively. In November, thesecondary reserve price moved up due tothe increased requirement amidst a lower,more expensive reserve supply19.

19Higher proportion of offers in the offer tranche above

$5/MWh.

Overall, the growth of the secondary

reserve supply outpaced the increase in therequirement for 2013, as the supply andrequirement grew 13.9 percent and 2.6percent respec tively compared to 2012.Regardless, the secondary reserve price for2013 increased 62.0 percent from 2012,to an average of $3.10/MWh. Akin tothe primary reserve market, the rise in theannual reserve price was driven mainly bythe higher pricing of the secondary reserveoffers in 2013.

Offer capacity at and above $5/MWhOffer capacity below $5/MWhRequirement

Price


MW $/MWh625

500

375

250

125

0

11

10

9

8

7

6

5

4

3

2

1


CONTENTS



30

Monthly Contingency Reserve Price, Requirement and Supply 2013

Offer capacity at and above $5/MWhOffer capacity below $5/MWhRequirement

Price

Contingency reserve price fell; lower variability seen compared to 2012

The monthly contingency reserve price in2013 remained within a narrow range of

$3/MWh to $16/MWh. The price wasfairly stable during the middle of the year,with most of the price spikes and troughsoccurring in the first and last quarter.

The maximum monthly contingencyreserve price in 2013 was recorded inFebruary at $15.66/MWh. Despite alower requirement and improvement inthe reserve supply, the increase in thesupply was mostly concentrated in thehigher priced tranches20. Intermittentperiods of tight supply conditions that

caused the contingency reserve price tospike above $200/MWh also contributedto the higher price in February. Similarly,the contingency reserve price jumpedup in April due to periods of tight supplyconditions which placed pressure onprices. In November, a slight increase inthe requirement accompanied by weakerreserve supply drove the contingencyreserve price to $13.20/MWh.

Overall, the 13.0 percent growth in thecontingency reserve supply surpassed

the 4.9 percent increase in the reserverequirement in 2013. This he lped thecontingency reserve price to ease 42.7percent from the 2012 average of$15.91/MWh, to $9.12/MWh in 2013.

20 Higher proportion of offers in the offer trancheabove $5/MWh.


MW $/MWh


1,400

1,200

1,000

800

600

400

200

0

18

16

14

12

10

8

6

4

2

0

CONTENTS



31


Annual Interruptible Load (IL) Activations for Contingency ReserveMarket 2003 – 2013

Total number of periods of IL activation triples from 2012

As of 31 December 2013, the totalregistered capacity for IL remained thesame as 2012 at 21MW for each classof reserve.

Continuing the downward trend seen in

2012, the percentage of registered capacityof IL against the total fell for all three classesof reserves. The percentage of registeredcapacity by IL for reserves in 2012 was 2.3percent for primary reserve, 1.9 percentfor secondary reserve, and 0.7 percentfor contingency reserve. By end of 2013,this had dipped to 2.1 percent for primaryreserve, 1.7 percent for secondary reserveand 0.6 percent for contingency reserve.

The number of IL activations for contingencyreserve rose to 20 in 2013, from 11 in 2012.However, the total number of periods whenIL was activated for contingency reservealmost tripled from the preceding year to41 in 2013. This is the largest number in a

year since the market started, and represents33.3 percent of all occurrences of ILactivation for contingency reserve. Typically,each activation lasted two or three periods.There was no IL activation for primary andsecondary reserves in 2013.

Overall, payment to IL totalled $0.41 millionin 2013. This was a 49.3 percent dropfrom the $0.80 million payment in 2012,attributed mainly to the lower contingencyreserve price in 2013.

Instances of IL activation No. of periods of IL activation

Reserve Provider Group Effectiveness for Primary and SecondaryReserve Classes (Aggregate) 2009 – 2013

Statistics exclude IL providers.

Reserve effectiveness falls in 2013

Reserve providers in the NEMS areclassified into five groups, with GroupA reflecting reserve providers with thehighest level of responsiveness and

Group E reflecting those with the lowestlevel of responsiveness. A higher level ofresponsiveness attracts a higher proportionof reserve price.

The percentage of reserve providers inGroup A reached a record high in 2012 at60.1 percent, but dropped to 54.2 percentin 2013. Reflecting the overall poorer

performance of the reser ve providersrelative to 2012, the reser ve providers fromGroup A shifted mostly to Groups B and C,pushing the percentage of reserve providersin Group B to one of the highest levels sincethe market started. No reserve providerswere categorised in Group E during 2013.


A B C D E

Count

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

45

40

35

30

25

20

15

10

5

0

100

80

60

40

20

02009 2010 2011 2012 2013

6.00.91.8

5.6

13.8

6.76.37.3

11.2

22.4

12.49.111.9

19.4

46.654.2

60.1

51.547.3

23.6

27.5 26.6

16.611.2

%

CONTENTS



32

Annual Reserve Payment 2009 – 2013

Reserve payment falls to $63.5 million in line with lower contingencyreserve price

The reserve payment in 2013 dropped31.2 percent from 2012, to a total of$63.5 million. This was mainly driven bythe decline in the contingency reserveprice, which far outweighed the increasein the primary and secondary reserveprices. The reserve payment in 2013 isthe lowest level of the past five years.

The largest reserve payments were in themonths of February, June and November.The February payment accounted for 14.0percent of the annual total, and was dueto the primary and contingency reserveprices reaching their highest monthly levelsin 2013, and the secondary reserve pricehitting its second highest monthly level forthe year.


$ Million130

110

90

70

50

30

102009 2010 2011 2012 2013

114.3

63.5

92.488.1

70.8

CONTENTS



33

Annual Forced Outages by Generation Companies 2003 – 2013


Average Failure Probability by Year 2009 – 2013

Reliability of CCGT/cogen/trigen and ST drops

The probability of failure for a GenerationRegistered Facility (GRF) is the probabilitythat after being dispatched by the PSO

for a settlement interval, the GRF willcease operating, disconnect from thetransmission system, or both during thatsettlement interval, even if no other GRFfails. A generation unit with a lower failureprobability will be allocated less reservecost compared to one with a higher failureprobability.

In 2013, the average failure probability forCCGT/cogen/trigen, ST and GT was 0.048percent, 0.189 percent and 0.250 percent

respectively. Compared to 2012, the failureprobability of the CCGT/cogen/trigen andST categories has increased, while that ofthe GT category has dropped. The overallpoorer performance reflected in the failureprobability is aligned to the higher numberof forced outages and increased number ofcommissioning units in 2013.

Number of forced outages rises to highest level since 2005

There were 141 generation forced outagesin 2013, which is the second highestnumber since the market started. This was

partially driven by the increased numberof generating units in the NEMS, which hasrisen to 47 in 2013. The commissioningactivities of new facilities in 2013 alsocontributed to the higher instances offorced outages.

The number of generation units refers to the number of generation units registered in the NEMS which are subject to reser veresponsibility share.

Generation units subject to failure probability

Keppel Merlimau Cogen

Tuas Power Generation

Sembcorp Cogen

Incineration Plants

YTL PowerSeraya

Embedded Generators

Senoko Energy

TP Utilities

PacificLight Power

%

2009 2010 2011 2012 2013

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

ST GTCCGT/Cogen/Trigen

Instances of Forced Outage No. of Generation Units180

160

140

120

100

80

60

40

20

02003 2004 2005 2006 2007 20 08 2009 2010 2011 2012 2013

50

45

40

35

30

25

20

15

10

5

0

The record number of forced outagesstands at 159 in 2005.

CONTENTS



34

Monthly Regulation Price, Requirement and Supply 2013

Regulation price dips as low as $34/MWh

Offer capacity at and above $30/MWhOffer capacity below $30/MWh

Price Requirement


Annual Regulation Payment 2003 – 2013

Regulation payment at second highest level since market started

The regulation payment rose 13.2 percentin 2013 to a total of $87.6 million. Theincrease was due to the higher regulationrequirement which outweighed the dipin the regulation price. The regulationpayment in 2013 is the second highest

payment since the start of the market,following 2007 when the regulationpayment totalled $108.3 million.

The largest regulation payments were madein August, September and November. Thiswas consistent with the higher regulationprices in the later part of the year.

$ Million120

100

80

60

40

20

02003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

32.7 29.9

63.0 64.5

108.3

27.5

44.3

60.3

51.7

77.4

87.6

MW $/MWh210

180

150

120

90

60

30


120

110

100

90

80

70

60

50

40

30

After dipping to the 2013 low of$33.80/MWh in April, the regulationprice almost doubled in May at the backof more expensive regulation offers21. InAugust, the regulation supply suffered thebiggest month-on-month drop for the year,

falling 7.3 percent from July levels. Thisdrove the regulation price to rise above$100/MWh for the first time in 2013.The regulation price persisted above$100/MWh until December, when moreoffers shifted into the lower pricedtranches as compared to November.

In 2013, the monthly regulation price settledacross a wider range than 2012. While theprice stayed mostly within the $80/MWh to$100/MWh range in 2012, it spanned from$30/MWh to $115/MWh in 2013. Overall,the regulation price in 2013 declined 13.1

percent to an average of $79.55/MWhdespite a 31.5 percent increase in theregulation requirement. This was due toa 17.8 percent increase in the regulationsupply, and a shifting of the offers torelatively cheaper price tranches.

21Higher proportion of offers in the offer tranche above$30/MWh.

CONTENTS



35

MARKET PERFORMANCE: Competition in the Generation and Retail Markets

Annual Market Share by Generation Company 2009 – 2013 (Based on Scheduled Generation)

Increasing competition from smaller players puts pressure on the market share of larger generation companies

Two of the three leading generationcompanies had significant reductions intheir market share in 2013.

Tuas Power Generation’s market share fe llby the largest extent, dropping from 25.2percent in 2012 to 19.5 percent in 2013.

The market share of YTL PowerSeraya alsofell. This is the fourth consecutive year ofdeclining market share for the generationcompany, whose share dropped to 23.2percent in 2013.


Senoko Energy’s market share wasunchanged from 2012, and it continuesto hold the largest market share at27.0 percent.

With a net fall amongst the three largestgeneration companies, the market sharewas picked up mainly by the embeddedgenerators (EGs) and Keppel MerlimauCogen. Most significantly, the market shareof the EGs tripled from 1.2 percent in 2012to 3.9 percent in 2013. Keppel Merlimau

2009 2010 2011 2012 2013

Cogen’s market share rose to its highestlevel since the company joined the marketin 2006, jumping from 8.8 percent in 2012to 13.3 percent in 2013. The boost in themarket share of EGs and Keppel MerlimauCogen is in line with the registration of newfacilities since late 2012.

%

EmbeddedGenerators

Incineration Plants KeppelMerlimau Cogen

YTL PowerSeraya Sembcorp Cogen Senoko Energy TP Utilities Tuas PowerGeneration

PacificLight Power

30

25

20

15

10

5

0

3.92.5

13.3

27.0

1.1

19.5

23.2

8.5

1.1

CONTENTS



36

Annual Market Share of Market Support Services Licensee and Retailers 2009 – 2013 (Based on Withdrawal Energy Quantity)

Market share for most retailers falls from 2012

2009 2010 2011 2012 2013


MARKET PERFORMANCE: Competition in the Generation and Retail Markets

%40

35

30

25

20

15

10

5

0Keppel Electric Sembcorp Power Senoko Energy Supply Seraya Energy SP Services Tuas Power Supply PacificLight Energy

16.3

5.9

14.3

16.6

36.1

10.8

0.02

Keppel Electric experienced the mostsubstantial market share change in the retailmarket in 2013. Its market share expandedfor the third consecutive year to an averageof 16.3 percent in 2013. With the boost in

its market share, it was only slightly behindSeraya Energy, the largest retailer afterSP Services.

The market share of SP Services and allother retailers (apart from PacificLightEnergy, who entered the market in late2013) fell in 2013. Tuas Power Supply’smarket share dipped to 10.8 percent in

2013. Senoko Energy lost 1.3 percent inmarket share relative to 2012, to anaverage of 14.3 percent in 2013. For theremaining two retailers and SP Services,the changes in their market share from2012 were below 1.0 percent.

CONTENTS



37

MARKET PERFORMANCE: Settlement and Prudential Management

Energy Market Company (EMC) isthe financial clearing house for thewholesale market and settles the followingtransactions:• energy;• ancillary market products - three

classes of reserve (primary, secondary

and contingency) and regulation;• bilateral and vesting contracts;• uplift charges;• financial adjustments;• fee recovery of EMC and the PSO

administration costs; and• contracted ancillary services not

provided through the ancillary market(black-start services).

The market is well-secured. To cover theexposure of a debtor and the time required

to manage a default, all retailers mustprovide on-going collateral to EMC. Thiscredit support protects EMC and other MPsfrom payment defaults. EMC reviews therisk exposure of MPs on a daily basis.

A margin call is issued when a retailer’sestimated exposure reaches a value equalto or greater than 70 percent of the level ofits credit support. In 2013, EMC issued 47margin calls, and all were met within therequired time frame of two business days.

In 2013, the value of total retail settlementpayments (net of bilateral offsets) was$3.88 billion and the value of creditsupport on 31 December 2013 was$447.97 million.

CONTENTS



38

Contracted Ancillary Services 1 April 2013 to 31 March 2014

Contract Period Cost of Ancillary Services Total MW Contracted

1 April 2013 to 31 March 2014(excluding Keppel Merlimau Cogen)

$10,328,891.47 68.848

In addition to the co-optimised reserve andregulation markets, EMC negotiates andenters into ancillary services contracts on

behalf of the PSO, to ensure the reliableoperation of Singapore’s power system. Ifthese services are unable to be procuredcompetitively, for example, due to a limitednumber of available suppliers, their pricesare regulated.

From 1 April 2013 to 31 March 2014, theonly contracted ancillary service requiredwas black-start capability. Black-start serviceensures that there is initial generation tosupply electric power for system restorationfollowing a complete blackout.

Based on the PSO’s operationalrequirements, EMC procured 68.848MWof black-start service at a cost of $10.33

million. The capability was sourced fromYTL PowerSeraya, Senoko Energy andTuas Power Generation.

In October 2013, the PSO requested forKeppel Merlimau Cogen to be included inthe list of black-start capability providers,subject to the successful commissioningand validation of its black-start capabilitysite test 22.

22 Keppel Merlimau Cogen’s black-start capabilitycommissioning was completed in early March 2014.

However, as at 31 March 2014, the validation ofits black-start capability by the PSO has yet to becompleted.

MARKET PERFORMANCE: Contracted Ancillary Services

CONTENTS

k



39

The costs associated with the wholesalefunctions of the NEMS are recovereddirectly from the wholesale market or from

MPs and consumers.

EMC and PSO fees are recovered fromboth generator and retailer class MPs inproportion to the quantity of energy that

they trade.

EMC Net Fees and PSO Fees Recovered Directly from the NEMS –1 April 2013 to 31 March 2014

Total Fees$’000

Fees/MWh*$

EMC Net Fees 25,066 0.2848

PSO Net Fees 18,948 0.2153

Total Fees 44,014 0.5001

*The volume is estimated at 44,003MWh based on actual volumes up to September 2013 being annualised.

Fees Recovered Directly from MPs and Consumers

Supplier Service Method of Assessment

SP Power Assets Transmission charges Levied based on actual usage

SP Services (MSSL) Meter reading and datamanagement

Levied on a per meter basis

MARKET PERFORMANCE: Market Fees

CONTENTS



40

ADDITIONALINFORMATION

ADDITIONAL INFORMATION Gl



41

ancillary servicesThe additional services necessary to ensurethe security and reliability of the powersystem. The ancillary services tradedcompetitively on the wholesale marketare regulation and the three classes ofreserve. The black-start ancillary serviceis contracted by Energy Market Company(EMC) on behalf of the Power SystemOperator (PSO) on an annual basis.

balance vesting priceThis refers to the price for the balancevesting quantity allocated.

balance vesting quantity With the start of the Liquefied Natural Gas

(LNG) Vesting Scheme in the third quarterof 2013, a certain percentage of the totalallocated vesting quantity is pegged toLNG. The remaining percentage peggedto piped natural gas is known as balancevesting quantity.

black-start ancillary serviceA service to ensure that there is initialgeneration for system restoration followinga complete blackout.

contestable consumersConsumers that have the right to choose topurchase electricity from a retail supplier,directly from the wholesale market, or

indirectly from the wholesale marketthrough the Market Support ServicesLicensee (MSSL), SP Services. Consumersqualify to be contestable based on theirlevel of electricity consumption.

co-optimisationThe process used by the market clearingengine (MCE) to ensure that the mostinexpensive mix of energy, reserve andregulation is purchased from the marketto meet electricity demand in eachdispatch period.

dispatch scheduleA schedule produced by the MCE everyhalf-hour that is the basis for the supply

of energy, reserve and regulation inthe market.

embedded generators (EG)Generation units that generate electricityto their onsite load principally for selfconsumption.

energy The flow of electricity.

gigawatt (GW)A measure of electrical power equivalent toone thousand megawatts. Gigawatt hour(GWh) represents the number of gigawattsproduced or consumed in an hour.

interruptible load (IL)A contestable consumer of electricitythat participates in the wholesale marketand allows its supply of electricity tobe interrupted in the event of a systemdisturbance in exchange for reservepayment.

lng vesting priceThis refers to the price for the LNG vestingquantity allocated.

lng vesting quantity With the start of the LNG Vesting Schemein the third quart er of 2013, a certainpercentage of the total allocated vestingquantity is pegged to LNG. This is known

as the LNG vesting quantity.

loadThe consumption of electricity.

market clearing engine (MCE)The linear programme computer applicationused to calculate the spot market quantitiesand prices.

market participant (MP)A person who has an electricity licenceissued by the Energy Market Authority(EMA) and has been registered with EMCas a market participant.

megawatt (MW)A measure of electrical power equivalent toone million watts. Megawatt hour (MWh)represents the number of megawattsproduced or consumed in an hour.

metered demandMetered demand is the electricityconsumption which is proxied by thewithdrawal energy quantity (WEQ).

nodal pricingA market structure in which prices arecalculated at specific locations, or nodes,in the power system to reflect the demandand supply characteristics of each location.Nodal pricing is also commonly referred to

as locational marginal pricing.

non-contestable consumersConsumers that are supplied by the MSSL,SP Services, at a regulated tariff. Theseconsumers have not been given the right tochoose to purchase electricity from either aretail supplier, directly from the wholesalemarket or indirectly from the wholesalemarket through the MSSL, SP Services.

regulationGeneration that is on standby to fine-tunethe match between generation and load.

ADDITIONAL INFORMATION: Glossary

CONTENTS

ADDITIONAL INFORMATION Gl



42

reserveStand-by generation capacity orinterruptible load that can be drawn uponwhen there is an unforeseen disruptionof supply.

retail market The transactions made between retailcompanies and end consumers.

supply cushionThe supply cushion measures thepercentage of total supply available aftermatching off demand.

terawatt (TW)A measure of electrical power equivalentto one million megawat ts. Terawatt hour(TWh) represents the number of terawattsproduced or consumed in an hour.

Uniform Singapore Energy Price(USEP)The USEP is the weighted-average of thenodal prices at all off-take nodes.

vesting contract A vesting contract is a regulatory instrumentimposed on some generators by the EMA,with the objective of mitigating the potentialexercise of market power when the supplyside of the industry is concentrated amonga small number of generators. A vestingcontract requires these generators toproduce a specified quantity of electricity(vesting contract level) at a specified price(vesting contract hedge price).

vesting contract hedge price (VCHP)The VCHP is calculated by the MSSLevery three months. It is determined usingthe long-run marginal cost (LRMC) of themost efficient generation technology inthe Singapore power system, i.e., the

combined-cycle gas turbine (CCGT).EMC’s settlement system uses the VCHPto settle the vesting quantity between theMSSL and the generation companies. Withthe introduction of LNG into the generationmix, the VCHP has been replaced by ‘lngvesting price’ and ‘balance vesting price’from July 2013.

withdrawal energy quantity (WEQ)Withdrawal energy quantity (in MWh)refers to the amount of electricitywithdrawn by load facilities. It is providedby the MSSL.

wholesale market The transactions made between generationcompanies and retail companies.

ADDITIONAL INFORMATION: Glossary

CONTENTS

ADDITIONAL INFORMATION M k t E titi ’ C t t D t il



43

Generator Licensees ExxonMobil Asia PacificKeppel Merlimau CogenKeppel Seghers Tuas Waste-To-Energy Plant(in its capacity as Trustee of Tuas DBOO Trust)National Environment AgencyPacificLight PowerSembcorp CogenSenoko EnergySenoko Waste-To-Energy (in its capacity as Trustee of Senoko Trust)Shell Eastern PetroleumTP UtilitiesTuas Power GenerationTuaspringYTL PowerSeraya

www.exxonmobil.com.sgwww.kepinfra.comwww.keppelseghers.com

www.nea.gov.sgwww.pacificlight.com.sgwww.sembcorp.comwww.senokoenergy.com.sgwww.kepinfra.comwww.shell.com.sgwww.tuaspower.com.sgwww.tuaspower.com.sgwww.hyflux.comwww.ytlpowerseraya.com

Retailer Licensees Diamond Energy SupplyHyflux EnergyKeppel ElectricPacificLight Energy

Sembcorp PowerSenoko Energy SupplySeraya EnergyTuas Power Supply

www.diamond-energy.com.sgwww.hyflux.comwww.keppelelectric.comwww.pacificlight.com.sg

www.sembcorp.comwww.senokoenergy.com.sgwww.serayaenergy.com.sgwww.tpsupply.com.sg

Wholesale Market Traders Air Products SingaporeBanyan UtilitiesDiamond EnergyECO Special Waste ManagementGlaxo Wellcome Manufacturing – GlaxoSmithKline BiologicalsGreen Power AsiaISK Singapore23

MSD International GmbH (Singapore Branch)

Pfizer Asia PacificSingapore LNG CorporationSingapore Oxygen Air Liquide

www.airproducts.com.sg

www.diamond-energy.com.sgwww.eco.com.sgwww.gsk.comwww.greenpowerasia.comwww.isktuas.comwww.msd-singapore.com

www.pfizer.com.sgwww.slng.com.sgwww.soxal.com

Market Operator Energy Market Company www.emcsg.com

Market Support Services Licensee SP Services www.spservices.com.sg

Power System Operator Power System Operator www.ema.gov.sg

Transmission Licensee SP PowerAssets www.sppowerassets.com.sg

ADDITIONAL INFORMATION: Market Entities’ Contact Details

23 ISK Singapore withdrew as a market participant with effect from 11 December 2013.

CONTENTS



44



45

Disclaimer

While Energy Market Company Pte Ltd(“EMC”) has made reasonable efforts toensure that the information contained inthis report is accurate, it is provided forgeneral information purposes only andEMC does not represent and makes nowarranty whatsoever that the informationprovided is current, accurate, complete,fit, suitable or valid for any purpose or usewhatsoever and EMC shall not be liable forany direct and/or indirect loss or damageof any kind whatsoever suffered due to anyomission, error, inaccuracy, incompleteness,or otherwise, and/or any reliance on

such information. You should alwaysconsult a suitably qualified professionaland independently assess the informationprovided in this report. If you have anyspecific queries about this report or itscontents, contact us at [email protected].

Copyright Notice

© Energy Market Company P te Ltd 2014.All Rights Reserved.

Reproduction, transmission and distributionof this report for reference purposes only isauthorised provided that such reproduction,transmission and distribution is in respect ofthe whole and complete report. This reportshall not be reproduced, transmitted ordistributed in parts. Full acknowledgementof Energy Market Company Pte Ltd asthe source of this report must be given atall times.



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www.emcsg.com

NEMS Market Report 2013

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