Singapore to trial EVS (Electricity Vending System) with 1000 users from Nov 2008

To be on trial later this year, the Electricity Vending System (EVS) is the latest stage in a S$3 million project. Since 2003, about 10,000 large industrial users, which account for 75% of electricity demand, have already been able to negotiate their own electricity rates. The Energy Market Authority (EMA) expects electricity suppliers to offer different peak and off-peak packages to suit different consumer lifestyles. 1,000 volunteers from Marine Parade and West Coast will start 6-month trials from Nov 2008 and Feb 2009. If successful, it will be rolled out to all 1.2 million homes and small shops around 2010.

EVS allows users to buy electricity via the Internet, mobile phones, or vending machines at convenience stores; upon payment the amount is instantly credited to the user's electricity monitor wirelessly. The new EVS meter costs more than the current electricity meter, but this is expected to be less than the amount currently spent on billing, opening and closing of accounts and meter reading, which would no longer be necessary. Consumers could save money by being more aware of how much electricity they use. A consumer display unit (CDU) will show real-time electricity usage. As soon as an appliance is switched on, the number on the display unit rises, and users will see instant savings when they turn off the appliance.

- The good thing is that with this EVS system, the Singapore government is going to let market forces drive the pricing of electricity even more so than before. With competition from different suppliers, greater efficiency due to phasing out of the billing and manual meter-reading processes, it's going to be a whole new game for the consumer electricity market.

But the bad thing is also the fact that market forces are going to be driving the electricity pricing. Instead of knowing what the electricity rates will be for the next quarter as is the case now, with the new system, the electricity rates will vary according to market dynamics. Prices will be a lot more volatile, and this has the potential to confuse consumers. Another thing : with this, the system in effect becomes a prepaid system, instead of a postpaid system. It is a dramatic shift in the usage pattern. No money, no electricity. And that's the other thing about market forces - they are tough and unforgiving.

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