MSCP - EMC

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. This had led to more regulation prices clearing at the higher $100.1/MWhto $2000/MWh price band compared to the lower price band of$0.01/MWh to $100/MWh and extremely high price band of more than$2000/MWh;c. The maintenance of up to three CCGT plants worsened the supplycondition in January 2007 as capacity offered at $0/MWh droppedsignificantly to 30.8 percent from an average of 36.8 percent betweenApril 2006 and December 2006.MARKET EFFICIENCY33. Under the market rules, the role of the MSCP is to assess if the underlyingstructure of the wholesale electricity markets is consistent with the efficient andfair operation of a competitive market. The MSCP considered this question withregard to the regulation market performance during the review period.34. The MSCP’s observations are set out in the following paragraphs.a. Energy Supply Cushion35. The average supply cushion for energy has been declining from a high of 26.4percent in 2003 to 23.6 percent in 2006.36. The supply cushion measures spare capacity available after dispatch. Itindicates the amount of capacity available to meet additional demand or suddendrop in supply such as outages.37. As the supply cushion declines, the capacity set aside for reserve and regulationto meet any imbalances between load and supply will become more valuable. Adeclining supply cushion can therefore be expected to give rise to increasingreserve and regulation prices.b. Planned Outages38. With the all-time high level of CCGT planned outages in January 2007, it wasalso conceivable that prices would be higher than usual in January 2007.39. Nonetheless, January was only one of the months during the review period.Higher regulation prices had been observed since October 2006.c. Magnitude and Speed of Change of High Prices40. Since market start, it has not been unusual to observe big movements in averageregulation prices even on a monthly basis. As shown in Chart 4, the month-onmonthchange in regulation prices can swing between about negative 50 to 150percent prior to the high regulation prices in October 2006.41. However, it is also clear from Chart 4 that during the review period, the highprices had deviated from the normal trend observed historically, both in terms ofthe magnitude of change and the speed at which changes occurred.Page 10 of 14
400%Chart 4: Average Regulation Prices vs.Month on Month Change in Regulation Prices$/MWh800Month-on-Month Changein Average RegulationPrice350%300%250%200%150%100%50%0%Jan-03-50%Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07-100%7006005004003002001000Average Regulation PriceMonth-on-Month Change in Regulation PricesMonthly Average Regulation Pricesd. Energy Prices and Fuel Cost42. Since hitting a high of $167.4/MWh in August 2006, the average energy price(Uniform Singapore Energy Price or USEP) has been generally lower as shownin Chart 4 below. The declining fuel cost and energy demand in some periodswere the primary reasons behind the lower USEP.43. The prices for High Sulphur Fuel Oil (‘HSFO’) (see Chart 5), the most relevantfuel reference price for generation companies in Singapore, dropped from anaverage of US$51.4 a barrel between April and September 2006 to an averageof US$43 a barrel during the review period.44. However, unlike energy prices, the regulation price performance during thereview period did not reflect the performance of the underlying fuel oilfundamental.Page 11 of 14
Page 1 and 2: FINDINGS OF THE MARKET SURVEILLANCE
Page 4 and 5: Regulation Price3000250020001500100
Page 6 and 7: Chart 3a to 3d: Volatility of Regul
Page 8 and 9: Table 3: Regulation Offers in MW,Ap
Page 12 and 13: $/MWh180160140120100806040200USEPCh
Page 14: Table 4: Regulation Price Pattern b

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