Second Reading of the Public Utilities (Amendment) Bill - Round Up Speech

Round Up Speech by Dr Koh Poh Koon, Senior Minister of State for Sustainability and the Environment, at the Second Reading of the Public Utilities (Amendment) Bill, on 3 August 2023

INTRODUCTION

1 Mr Speaker, Sir, I thank Members for their support of this Bill.

2 Let me run through the queries and concerns raised topically.

3 I will begin by addressing the issues related to the mandatory water efficiency requirements.

MANDATORY WATER EFFICIENCY REQUIREMENTS

4 Mr Yip Hon Weng asked whether there are plans to mandate a higher recycling rate in the wafer fabrication industry, especially when Taiwan has already achieved a recycling rate of 75%. Mr Yip and Mr Don Wee also asked whether the costs associated with meeting the mandatory water recycling requirements will affect the competitiveness of businesses in Singapore.

5 I thank the Members for these questions, which reflect the importance of striking a balance between ensuring water sustainability and business competitiveness.

6 As mentioned in my speech earlier, setting the mandatory recycling rate for the wafer fabrication industry requires careful calibration. We need to strike an appropriate balance between having a higher recycling rate, and the technological and economic viability of doing so.

a. Too low a mandatory recycling rate means that we do not maximise the opportunity to achieve a more sustainable water demand growth.

b. Too high a recycling rate may be economically prohibitive for several companies, which will end up eroding Singapore's competitiveness.

c. We are mindful of potentially higher operational costs and land constraints that become especially salient when the recycling rate goes beyond 50%, as companies will have to adopt more advanced water treatment technologies.

7 To address Mr Louis Ng's query on whether existing technology was taken into account when deciding the water efficiency requirements, the Government has taken into account not just technical viability, but also the economic viability.

8 After consultations with companies, we found that a recycling rate of 50% would be reasonable and doable currently.

a. Today, the median recycling rate for existing wafer fabrication plants in Singapore is 40%, although some facilities are already recycling beyond 50%.

b. Companies we engaged agreed that a minimum recycling rate of 50% was technically and economically viable.

i. This is corroborated by the high recycling rates that the companies have declared for their recently commissioned and upcoming wafer fabrication plants in Singapore.

ii. For example, United Microelectronics' expansion plant, which is scheduled to be commissioned in 2024, is designed to achieve a recycling rate above 60%.

9 In fact, some companies indicated that they aspired to recycle beyond the mandatory level as part of their corporate social responsibility to conserve resources.

a. PUB welcomes and supports the aspirations of these companies to achieve a higher recycling rate beyond the mandated levels.

10 As climate action gains greater traction globally and resource sustainability becomes more pertinent, we see that consumers and investors are paying greater attention to corporate sustainability efforts.

a. It is therefore in the companies' long-term interests to show their commitment towards water sustainability efforts.

b. Likewise, it is critical for Singapore to continue to show our commitment to water sustainability as a responsible steward of the environment.

c. Introducing mandatory water recycling requirements is a key part of this effort.

11 As Mr Wee rightly pointed out, we must remain an attractive investment and business destination. He raised an important point on providing support to affected companies. Mr Yip asked about the Water Efficiency Fund (WEF) and the Industrial Solutions Demonstration Fund (IWSDF), and whether the funding support is sufficient to make a substantial impact in achieving our water sustainability goals.

12 Since 2007, PUB has been providing funding support in addition to technical support to companies that are looking to invest in technologies to raise their water recycling rates. PUB's funding support has greatly reduced companies' payback periods and incentivise them to adopt water efficient practices.

a. Under the WEF, companies may apply for funding to perform water efficiency assessments, to implement pilot and full-scale water recycling projects, or to adopt water efficient equipment.

b. The IWSDF is a sub-scheme under the WEF and supports the adoption of new technologies and innovative water recycling solutions.

i. The projects should utilise emerging or recently developed technologies or innovative applications of existing technologies which have not been implemented in the industry.

ii. Addressing Mr Wee's query on the Government support for companies affected by the water recycling requirements, the IWSDF allows PUB to co-share with companies the risks of adopting novel water efficiency solutions, and through this, tip the cost-benefit balance in the favour of companies.

13 As of June 2023, 375 successful applicants have received grants under the WEF and IWSDF, with the grant amounts ranging from $10,000 to $4 million per project. When the projects are fully implemented, it could result in potential water savings of over 70 million litres a day.

14 Mr Wee asked about the Government's support to develop technologies for higher recycling rates and to upskill local businesses in this area.

a. PUB fosters industry growth through collaborations with local and overseas partners in the water and water-related industries.

b. Areas of collaboration include research, technology development, and knowledge management.

c. For example, PUB offers industrial test-bedding sites to help develop new technologies in the water market.

15 I strongly encourage companies to tap on PUB's support schemes to boost their water recycling efforts.

a. Raising the water recycling rate will contribute to sustainability in water demand growth, and enhance Singapore's water security in the long-term.

b. Recycling beyond 50% will result in even greater water savings for the companies while placing Singapore in a better position to host more high value water-intensive investments.

16 We will review the effectiveness of the proposed requirements, alongside future changes in technology, before considering whether to mandate higher recycling rates or to expand the requirements to other sectors, as Mr Yip had asked.

a. Importantly, we need to consider that other sectors may have a lower recycling potential due to the heterogenous nature of their processes.

b. This is because they may have waste streams that are of very different content and quality, making it more challenging and much costlier to recycle water.

c. Hence, it may not be viable to apply a single mandatory requirement across all industrial sectors. Working with companies and individual sectors to identify relevant water conservation opportunities would be a more effective approach.

d. Nonetheless, we may consider extending the requirements in future if it becomes economically and technically feasible to do so.

17 In the meantime, I encourage businesses in other sectors such as refineries, petrochemicals, and chemicals companies to refer to PUB's guidelines on best practices to improve water efficiency, as Mr Ng mentioned earlier. These guidelines are available on PUB's website.

18 Mr Ng asked whether these guidelines would be updated for the wafer fabrication, electronics, and biomedical industries in view of the new requirements. Mr Ng also asked if water efficiency guidelines will be introduced for more industries.

a. The guidelines are reviewed regularly, along with updates to the best practices and case studies.

b. A second version of the guidebook for wafer fabrication and semiconductor companies was published in 2022. In the same year, PUB also introduced three new guidebooks for the commercial laundry, food and beverage manufacturing, and biomedical manufacturing companies.

19 Mr Wee asked what will happen if companies have genuine reasons for not being able to meet the water efficiency requirements. He also asked if waivers can be granted based on valid reasons.

a. We understand that some companies may face unique challenges in meeting the water efficiency requirements.

b. The proposed Section 40(8), introduced by Clause 12 of the Bill, is meant to address this. It empowers PUB to waive or modify any prescribed water efficiency requirement, if there are good reasons to do so.

c. Such waivers will be considered on a case-by-case basis, taking into account the specific circumstances of companies, following PUB's technical assessment of the reasons for waivers.

20 I hope that Members have a better understanding of the importance of managing our water demand growth.

a. Besides water security, it also ensures that the cost of producing and supplying water remains sustainable for Singapore in the long run.

b. By carefully managing water demand growth, we can build our water infrastructure at a more sustainable pace, thereby controlling costs, which Mr Wee had asked about.

21 I will now move on to address issues related to private water suppliers (PWS).

CHARGES ON PRIVATE WATER SUPPLIERS

22 Mr Gan Thiam Poh and Mr Yip asked about the profiles and number of PWS in Singapore.

23 Currently, there are around 300 PWS in total. The vast majority are rainwater harvesters, with a small number of private desalination plants. Most PWS collect rainwater or produce desalinated water for their own use.

24 Mr Gan and Mr Wee asked about our long-term plans for the private water supply sector and the role of PWS in our water supply landscape.

25 To ensure the resilience of our overall water supply system, we envision a small private water supply sector comprising mostly small-scale PWS, with the bulk of water still supplied by PUB.

a. The value proposition for PWS is to supply water of varying qualities on a fit-for-purpose basis.

b. For example, instead of using potable water, commercial entities harvest rainwater for landscape irrigation.

c. This enhances our overall water security because it encourages the conservation and efficient usage of potable water.

26 As Mr Yip accurately pointed out, PWS or their customers could face water supply disruptions if PWS' operations are affected or if the PWS ceases supply as a business decision.

a. These are valid concerns.

27 As Singapore's national water agency, PUB must maintain sufficient reserve capacity so that we can ramp up water production at short notice to supply to the PWS and/or their customers in the event of disruption in PWS' operations.

a. Keeping private water supply small would be an important safeguard and manages the enterprise risk for our water system.

b. If the PWS sector were to grow multi-fold, the PWS sector would place significantly more risk on our water system. PUB would need to provision for and invest in more capacity to ramp up production in case of any disruptions faced by PWS or cessation of supply.

c. An overly fragmented PWS sector with an excessive number of small operators would also not be able to fully reap economies of scale and be less economically efficient.

28 Mr Gan had several clarifications on the charges, including the intent of introducing the charges, and how these charges would apply.

29 As I have shared earlier with Members, we want to take a practical and calibrated approach in introducing the charges to PWS.

30 When determining the applicable threshold for rainwater harvesters, we considered the overall landscape and profile of rainwater harvesters.

a. We observed that most PWS are small-scale rainwater harvesters such as those in HDB estates and schools, which collectively account for around 20% of privately harvested water.

b. As a practical and calibrated approach, we will impose WBT only for large rainwater harvesters, whose tank size is greater than 350 cubic metres.

i. This would capture harvesters who collectively harvest the majority, around 80%, of the volume of all privately harvested rainwater.

ii. This includes entities such as country clubs, golf courses, and industrial premises with tank sizes larger than 350 cubic metres.

c. This will allow us to strike a balance between the ideal policy position that WBT should be applied to all rainwater harvesters while helping the industry manage the administrative and costs of compliance.

d. Hence, to Mr Wee's question on whether the charges would affect small and medium enterprises (SMEs) and individual consumers, those with tank sizes of 350 cubic metres and below will not be affected.

31 Mr Gan asked whether the charges would apply to private desalination plants that supply water for their own use within the same premises or to different premises. We have taken a calibrated approach when it comes to the imposition of charges.

a. WBT will apply for private desalination plants for the volume of water supplied for both their own use and for sale. This is consistent with our approach that all water users contribute to the national used water system.

b. WCT is only applicable if the water is supplied to third parties, including subsidiary companies.

32 Mr Gan also asked why the WCT would not be imposed on PWS supplying water for their own use.

a. The principle behind WCT is to encourage water conservation.

b. Private desalination plants already have a strong business motivation to conserve water due to the high cost of desalination, while rainwater harvesters are already conserving treated water by using rainwater.

c. Imposing WCT on these two types of PWS would therefore increase business costs without improving water conservation.

33 Mr Gan asked if the charges would discourage PWS from supplying water. We acknowledge that the charges will add to the PWS' operating costs.

a. To address Mr Gan's concerns, and help PWS cope with the transition, PUB will only implement the charges in early 2025, instead of immediately, and adopt a phased approach to implement the charges.

b. PUB has engaged and will continue to engage the PWS and support them during this transition.

c. We have assessed that unlike small-scale rainwater harvesters, imposing WBT on large-scale rainwater harvesters is unlikely to discourage them from harvesting rainwater.

d. This is because they benefit from economies of scale that make rainwater a financially viable alternative to PUB-supplied potable water.

e. I would like to emphasise again that the charges will only be imposed on rainwater harvesters with tank sizes larger than 350 cubic metres, or private desalination plants.

34 Mr Ng pointed out that Clause 4 of the Bill allows for the imposition of the WBT to be more finely calibrated, and asked what changes to the imposition and calibration of the WBT are envisaged.

a. To clarify, Section 20 currently enables WBT to be charged on water supplied by PUB only.

b. We are amending Section 20 to enable WBT to be charged on water supplied by persons other than PUB, namely, PWS. Current provisions in Section 20 are being expanded to include "extracted water" and "water derived from extracted water", so that WBT can be calculated with reference to rainwater, and desalinated water.

c. The intention is to charge PWS the same WBT rates as PUB-supplied water for non-domestic premises, currently at 92 cents per cubic metre, and this will be specified in the subsidiary legislation.

d. PUB will make clear the basis for imposing differentiated WBT when such cases arise.

35 To conclude the segment on PWS, I would like to reiterate that the introduction of charges is aimed to align the treatment of privately supplied water with the charging principles for PUB-supplied water.

a. This is to encourage conservation and efficient usage regardless of its source.

b. These charges will also help to ensure the sustainable growth of the private water supply sector.

36 I will now cover the final segment on questions related to PUB's operations.

AMENDMENTS RELATED TO PUB'S OPERATIONS

37 Mr Yip asked how often the powers of entry were exercised by PUB in the past and highlighted that such powers should be exercised judiciously and be proportionate to the situation.Mr Louis Ng also asked whether reasonable advance notice will be provided for compliance with notices, and whether force would be used to secure entry of premises.

a. I believe Mr Yip is referring to Clause 6 of the Bill, which amends Section 24A of the Act that deals with powers to enter premises for installation or maintenance of pipes, water installations, etc.acquired by PUB.

i. On average, PUB has to request and gain access to private premises eight times a month to carry out such works.

b. On the other hand, Mr Ng is referring to the proposed Section 26(10) introduced under Clause 8 of the Bill. The provision allows PUB to enter premises to carry out works or take measures if a person fails to comply with a notice to stop unauthorised relocation of water installation.

c. For both sections, PUB will seek the cooperation of the owners or occupiers, and advance notice will be given. The entry must be at a reasonable hour, or otherwise at a time agreed with the owner or occupier of the premises.

i. Regardless of which section applies, PUB will assess the situation in each case and ensure that any entry onto private premises is justified and proportionate.

d. The power under Section 24A is different from emergency situations in which PUB has to take immediate action, as Mr Wee has asked about.

i. Under emergency situations such as a burst in a pipeline running through private property or disruptions to public water supply, PUB must act immediately to remove obstruction or enter private premises without notice to address the urgent** emergency** situation.

ii. The provision to act in such emergency situations is Section 24B of the Act.

38 Mr Ng asked if PUB would make payment to a person who transfers the ownership of a water installation to PUB, as provided in Clause 8 of the Bill, which amends Section 26 of the Act.

a. Section 26 will be amended to regularise the existing requirement for developers to submit diversion plans to PUB for approval before they start works to divert PUB's pipes and water installation.

b. Such diversions are requested solely by developers carrying out construction works at or in the vicinity of existing water installation, for their own development projects.

c. As such, after developers divert the water installation, PUB will take over the ownership of the water installation, for long term maintenance and operational flexibility, without any payment or cost to the development.

39 Finally, Mr Yip suggested that appropriate provisions be put in place to accommodate residents, especially seniors, who may have difficulties accessing and reading digital notices.

a. I thank Mr Yip for his suggestion.

b. Clause 16 of the Bill amends Section 70 of the Act to update the various means by which service of documents may be effected by PUB. For example, it will enable PUB to send electronic notices, in place of hardcopy documents, to alert customers on high water consumption.

c. The amendment does not provide for e-notices to automatically replace hardcopy notices. It is an opt-in system for customers who prefer to receive e-notices in lieu of hardcopies.

CONCLUSION

40 Mr Speaker, Sir, as I have said in my opening speech, we have come a long way since independence to achieve water security.

41 The proposed amendments under this Bill serve to ensure that the Act remains relevant and effective in safeguarding our water security, through sustainable water demand management and reliable supply of water, especially in light of climate change and increasing water demand.

42 Sir, I beg to move.