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

Opening 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, on behalf of the Minister for Sustainability and the Environment, I beg to move, “That the Bill be now read a Second Time.”

OUR ROAD TO ACHIEVING WATER SECURITY

2 Since our independence, water supply has always been an existential issue for Singapore.

a. As a small island nation, we needed a safe and reliable supply of water to ensure our survival and prosperity. b. Water demand has grown by more than six times since independence to meet the needs of a growing population and economy.

3 Through decades of long-term planning, innovation, and investments, we have built up our Four National Taps.

a. Behind each tap lies an integrated water system.

b. This comprises 17 reservoirs and water catchment covering two-thirds of Singapore’s total land area, 15 water treatment plants and four water reclamation plants, an island-wide network of water pipelines, drainage and sewer systems, and the list goes on.

4 We have overcome droughts, floods, and cleaned up our rivers. And we now enjoy a world-class water system producing safe and reliable drinking water at the turn of the tap, anytime and anywhere.

a. However, we cannot take this for granted.

5 It is increasingly challenging for Singapore to ensure water security and to meet the water needs of our growing population and economy due to two trends:

a. Climate change; and

b. Increased water demand.

Climate Change

6 First, climate change.

7 Some of us may recall that we experienced prolonged dry conditions from around 2014 to 2016, when we last experienced a major El Niño event.

a. We saw water levels in the Linggiu Reservoir in Johor plunge to a historic low of 20%.

b. This was a far cry from healthy reservoir levels of 80-90% which we were used to. This was very worrying because the depletion of the Linggiu Reservoir would affect our supply of imported water from Malaysia. It took five years for the reservoir to reach healthy levels again.

c. Likewise, water levels in local waterbodies also fell during the prolonged dry conditions.

d. This demonstrates the importance of long-term planning and investment in weather-resilient water sources like NEWater and desalination.

e. Since then, we have built new desalination plants in Tuas, Marina East, and Jurong Island, bringing the total to five desalination plants today.

8 Unfortunately, we cannot prevent a recurrence of such extreme weather events. In fact, climate change is likely to cause such extreme weather events to occur more frequently and with more severe impact.

a. According to recent reports by the United Nation’s World Meteorological Organisation, global temperatures will likely surge to record levels over the next five years.

b. This year, the naturally occurring El Niño is underway again. This will further raise global temperatures and aggravate the risk of prolonged drought, adding additional stress to our water supply.

9 The experience of the previous major El Niño event is a stark reminder that we must not be complacent about our water security.

Increased Water Demand

10 Second, we also expect an increase in demand for resources like water, as our population and economy grow.

11 Singapore currently consumes about 440 million gallons of water per day (mgd), which is equivalent to about 800 Olympic-sized swimming pools.

a. Our consumption is expected to almost double by 2065, with the non-domestic sector being the major source of demand growth.

b. This is especially so as we continue to draw in and grow high-value but water-intensive industries. This includes the wafer fabrication, biomedical and electronic industries, as engines of economic growth.

12 It is neither sustainable nor practical in land-scarce Singapore to rely only on building more and more water infrastructure to meet our ever- increasing water needs.

a. Besides competing for land with other uses, construction costs have also risen significantly. This is especially so as we need to construct more of our water infrastructure underground.

b. Each new drop of water costs more than the last. Our newer water sources like NEWater and desalinated water, are energy-intensive and costly to produce.

c. These factors will add pressure for the Government to increase the water price to fund and operate such infrastructure.

13 Hence, it is crucial that we carefully manage the growth in our water demand.

a. Sustainable growth in water demand allows us to build additional water infrastructure at a more measured pace.

b. This contributes to a more sustainable cost of producing and supplying water in the long run.

14 By adopting the 3Rs concept – reduce, reuse, and recycle – which we are all familiar with, we can conserve water and use it more efficiently, making every single drop of water count.

OVERVIEW OF THE AMENDMENTS

15 This Bill serves to update the Public Utilities Act 2001 (PUA) in two main areas – recycling requirements for large water users, and to impose charges on large private water suppliers (PWS).

16 We will also introduce amendments related to PUB’s operations, to better support their efforts in ensuring the security of our water supply.

17 I will elaborate on each group of amendments.

MANDATORY WATER RECYCLING REQUIREMENTS

18 First, on mandatory water recycling requirements.

a. Currently, water demand from the non-domestic sector accounts for about half of our total water consumption. This will increase to about two-thirds of our total water demand by 2065.

19 We must therefore make greater efforts to achieve a more sustainable growth in non-domestic water demand.

20 An important strategy is to raise water efficiency, particularly for large water users.

a. During the Committee of Supply earlier this year, my Ministry announced that we will be introducing mandatory recycling requirements on new projects in the wafer fabrication, electronics, and biomedical industries.

b. Clause 12 of the Bill will insert a new Section 40 in the PUA to reflect this.

21 I will now elaborate on how we arrived at the specific requirements.

Introducing water efficiency requirements in water-intensive industries with high potential for water recycling

22 We considered two key factors in determining which industries to introduce water efficiency requirements for:

a. Extent of water demand; and

b. Potential for water recycling.

23 The largest water consumers are companies in the wafer fabrication, electronics, and biomedical industries.

a. They require large amounts of water for their manufacturing processes such as rinsing and cooling.

b. Collectively, these companies take up almost one-fifth of the total non-domestic water demand today.

c. And given the strong investment interest which Singapore has attracted from semiconductor and biotechnological firms in recent years, the projected water demand from the non-domestic sector is expected to increase.

d. We are keen to work with companies in these industries to conserve and improve water efficiency, and thus reduce the growth in water demand.

24 Apart from looking at industries with high water demand, we also shortlisted those whose processes have high potential for water recycling.

a. This refers to processes that produce fairly clean used or reject water streams, and thus easier to recycle as minimal treatment is required. This allows for water recycling to be done cost effectively.

25 With business costs and competitiveness in mind, we want to ensure that any requirements imposed will be economically and technologically viable for the companies.

26 The wafer fabrication, electronics, and biomedical industries fulfill both criteria of having high water demand and producing water streams with high potential for recycling.

a. However, we also recognise that they each use water differently, and processes can differ from one facility to another.

b. So, we will apply targeted water efficiency requirements specific to the context of these industries.

Requirements for the wafer fabrication industry

27 For new wafer fabrication plants involved in front-end semiconductor manufacturing, we will require a minimum 50% recycling rate.

a. We have observed that current technologies already allow companies to achieve such high recycling rates.

b. For example, the majority of wafer fabrication plants in Taiwan have achieved a recycling rate of at least 75%.

c. In consultation with the industry and recognising Singapore’s unique land constraints, we determined that for a start, a 50% recycling rate will strike an appropriate balance between having a higher recycling rate, and the technological and economic viability of doing so from the companies’ perspective.

d. We will review the effectiveness and impact of the proposed requirements, alongside future changes in technology.

Requirements for the electronics and biomedical industries

28 For the electronics and biomedical industries, processes are more diverse. Their use cases for recycled water are more limited compared to those involved in wafer fabrication.

a. Hence, instead of requiring a minimum recycling rate, we will require the recycling of specified waste streams for these companies.

b. This includes reject streams from processes such as microfiltration, ultrafiltration, and reverse osmosis.

c. Several companies are already doing so today.

i. One successful example would be Hoya Electronics. They have implemented projects to recycle their reject streams and recover effluent from wastewater.

ii. This allowed them to achieve industry-leading recycling rates of over 75%.

Implementation of the requirements

29 We intend for the requirements to apply from January 2024 to new projects, including the expansion of existing plants, that will consume at least 60,000 cubic metres of water annually. These requirements will not be applied to existing projects.

30 We are focusing on new projects as waste stream segregation for water recycling can be designed upfront.

a. Beyond designing for recycling, occupiers of the new projects will also be responsible for ensuring that recycling is done while these projects are in operation.

b. Existing facilities will not be subjected to the new requirements as they will likely face space limitations when recycling equipment had not been planned for.

c. Nonetheless, PUB will continue to work with companies who are keen to increase the recycling rates in existing plants through facilitative measures such as funding and technical support for recycling projects.

Feedback from the industry

31 PUB and EDB have engaged affected companies and industry associations in 2021 and 2022.

a. They were generally supportive of the proposed requirements and agreed with the technical and economic viability of these requirements for new projects. This is also in line with the stated sustainability or environmental goals of many companies.

b. The payback period for the recycling infrastructure is assessed to be typically between two to four years for wafer fabrication companies and less than one year for the electronics and biomedical companies.

c. Companies can recover the cost of their investments over time and enjoy cost savings in the longer term through reduced water usage.

d. Some companies have even expressed interest in raising their water recycling rates for new projects beyond the mandated 50%, and asked if the Government could support their efforts in doing so.

Enhancements to PUB’s funding for industries

32 PUB has taken in the feedback. We will provide financial support for companies that are willing to invest in technologies to raise their water recycling rate.

33 PUB reviewed its funding framework for the Water Efficiency Fund (WEF) and the Industrial Water Solution Demonstration Fund (IWSDF), which provide financial support for companies with projects on water recycling and adoption of water efficient equipment.

a. Since July 2023, we have raised the funding caps for WEF and IWSDF from $1 million and $4 million respectively, to $5 million each for each project.

b. We understand that some companies may require additional time and support to adjust to the new requirements.

i. As such, PUB will extend its support to companies by making WEF funding available to eligible companies until end-2025 to help raise their recycling rates to the mandatory levels.

ii. Thereafter, WEF funding will only be eligible for companies looking to raise their recycling rates above the mandatory requirements.

34 The enhanced funding incentives will make it more economically viable for the companies to introduce larger-scale water recycling projects, as it greatly reduces their payback period. This is especially so amongst those who recycle above the mandated 50%.

a. Based on PUB’s projections, plants recycling at higher rates, which tap on the funds can reduce their payback periods to about five years or less, compared to the current payback periods of up to 11 years.

35 Take GlobalFoundries, a wafer fabrication manufacturing company for example.

a. Its water recycling project will use innovative state-of-the-art technologies to treat and recycle wastewater from their manufacturing processes.

b. With funding support from PUB’s IWSDF for their new project, GlobalFoundries will be able to raise their recycling rates by 10 percentage points, from 45% to 55%.

c. The project results in water savings of 0.4 mgd and reduces the company’s water bills by around $1.5 million annually.

36 I am glad that companies such as GlobalFoundries are actively embracing water recycling as part of their sustainability goals.

37 Besides funding support, PUB provides technical advice on design plans for new facilities and operations.

38 PUB stands ready to support the industries’ initiatives. This will improve industries’ competitiveness and strengthen Singapore’s overall water resilience.

CHARGES ON PRIVATE WATER SUPPLIERS

39 Besides managing water demand by introducing water efficiency requirements, ensuring a stable water supply is equally important for water security.

40 The next group of amendments introduces charges to large private water suppliers (PWS) to ensure sustainable growth in Singapore’s private water supply.

a. PWS refer to entities other than PUB, that harvest rainwater or desalinate seawater following PUB’s approval.

b. Currently, we have a small private water supply sector that supplies about 1% of the total water demand in Singapore. The sector consists of private desalination plants and rainwater harvesters of various sizes.

41 In recent years, PUB has received an increased number of proposals from PWS to collect rainwater or extract and treat seawater, to provide non-potable water for their own use or for sale.

a. The number of large rainwater harvesters has tripled since 2013, and we expect interest to continue growing.

42 We recognise that in the water supply landscape, PWS provide water that is fit-for-purpose, which allows for the more efficient use of water.

a. Nonetheless, to ensure overall water resilience, PUB is still expected to maintain sufficient reserve capacity and be ready to ramp up water production at short notice to make up for any disruptions faced by PWS.

b. For instance, in a prolonged drought scenario, large rainwater harvesters will turn to PUB-supplied water sources.

c. Furthermore, PUB must develop and maintain sufficient capacity in our sewer network and water reclamation plants to collect and treat used water from PWS and their customers.

43 On this basis, the same principles of water conservation and the same contribution towards the national used water system should apply to PWS, just like how they apply to all other water users. We need to ensure that the growth of the private supply of water remains sustainable.

44 These two principles are reflected in the pricing of PUB-supplied water.

a. Besides water tariffs, PUB’s customers are subjected to the waterborne tax (WBT) and the water conservation tax (WCT).

b. The WBT is a tax contribution to the national used water system paid by all water users, regardless of whether the premises are connected to PUB’s used water network.

c. The WCT is a tax to encourage water conservation and to reflect the scarcity value of water.

45 Today, PWS’ customers do not pay WCT nor WBT.

46 Clauses 4 and 5 of the Bill introduce amendments to align the treatment of privately supplied water with the existing charging principles for PUB-supplied water.

a. Specifically, Clause 4 of the Bill will amend Section 20 to enable the WBT to be charged on water supplied by PWS.

b. Clause 5 of the Bill will insert a new Section 20A to enable the WCT to be imposed under the PUA instead of the Statutory Board (Taxable Services) Act 1968.

c. The new Section 20A will also allow for the scope of WCT to be expanded to cover water supplied by PWS.

47 We will take a practical and calibrated approach and impose these charges only on large PWS. To be clear, smaller-scale rainwater harvesters those in some housing estates or households will not be affected.

a. The WBT will be imposed on private desalination plants and large rainwater harvesters defined as those with tank sizes larger than 350 cubic metres. This is equivalent to around 26,000 typical water pails that are commonly used in households.

i. This threshold was determined based on the average daily usage of water by larger rainwater harvesters who collectively harvest the majority of the volume of all privately harvested water.

b. The WBT will be applied to the volume of water supplied for both their own use and for sale.

i. This is in line with the principle of WBT as a tax contribution to the national used water system paid by all water users.

c. The WCT will only be imposed on water supplied for sale by private desalination plants.

i. The WCT will not be applied to desalination plants supplying water for their own use. This is because we recognise that there is already a strong business motivation to conserve water due to the high cost of desalination.

ii. It will also not apply to rainwater harvesters since they are already helping to conserve treated water by using rainwater.

48 With this calibrated approach, the WBT and WCT is expected to mainly affect entities such as country clubs, golf courses, and industrial premises with tank sizes larger than 350 cubic metres.

a. Small scale rainwater harvesters with smaller tank sizes 350 cubic metres and below will not be affected.

b. This includes those in HDB estates, community clubs, schools, and commercial entities with tank sizes that do not exceed the threshold.

49 PUB will be installing water meters at the PWS’ premises to measure the volume of water supplied for own use or for sale by these large PWS. This will allow PUB to obtain accurate readings of the volume of water used or supplied by the PWS.

a. Clause 6 of the Bill will amend Section 24A to empower PUB to carry out the water meter installation.

b. The amendments to Section 24A will also empower PUB to require the owner or occupier of the premises to carry out works at the premises that are necessary for the installation of the water meter.

50 We appreciate that the charges will add to PWS’ operating costs.

51 PUB has engaged the affected PWS on the new pricing policy.

a. The comments and queries received from the rainwater harvesters thus far had been clarificatory in nature, such as how water use would be metered.

b. Owners of private desalination plants raised concerns on the increase in operating costs, especially given the poor business outlook.

52 In response to the concerns of PWS, we intend to impose the charges in early 2025, giving the affected parties more than one year to give time for transition and to adjust to the changes.

a. Furthermore, we will phase the new charges in two steps, with 50% of the prevailing WBT and WCT rates in 2025, and the full prevailing rates to be imposed in 2026.

AMENDMENTS RELATED TO PUB’S OPERATIONS

53 Finally, a third group of amendments are more technical and relate to PUB’s operations to safeguard our water security.

a. These amendments serve to ensure that the Act remains relevant and effective in empowering PUB to carry out its work.

54 First, Clause 7 relates to powers for PUB to recover the cost of removing the obstruction during emergencies where PUB must act immediately, such as removing obstruction to fix pipe bursts. Clause 10 introduces amendments to broaden PUB’s powers to require relevant persons to remove obstructions over all components of the water installation for repair and maintenance works.

55 Second, Clause 8 introduces requirements for developers to submit diversion plans for PUB’s approval before they start relocating PUB’s water installations.

a. This is to prevent disruptions to water supply and to ensure that the relocated water installations meet PUB’s standards and requirements.

b. The relocation of such installations without PUB’s approval will be an offence.

56 Third, Clauses 4 and 5 deal with matters related to the components of water price reflected in water bills.

a. The WCT provisions will be moved from the Statutory Board Taxable Services Act 1968 to the PUA, as mentioned earlier. This will bring all water price-related provisions under the PUA.

b. PUB will be empowered to grant, with the Minister’s approval, rebates or waivers on components of the water bill. This power may be exercised to grant “leak concessions”, for instance, where water is lost through a leak that is beyond a customer’s control and the circumstances justify a reduction in the amount of the water bill to account for the leak.

57 Fourth, Clause 15 introduces a five-year time-bar for monetary claims for overpayments or erroneous payments.

a. This provision aligns with time-bars in other pieces of legislation such as the Goods and Services Tax Act 1993 and the Customs Act 1960, which minimises agencies’ legal risk from very dated claims.

b. We intend to commence the time-bar on 1 January 2025, about one and a half years from now. This provides a transition period so that customers have sufficient time to seek redress before the time-bar comes into effect.

58 Finally, Clauses 16 and 17 update the current requirements for the service of documents under the PUA.

a. This brings us in line with the overall Government policy to promote digitalisation.

b. We will also introduce related amendments to the SDA under Clause 20 to similarly update the service requirements for the purposes of the SDA.

CONCLUSION

59 In summary, there is a strong impetus for us to manage growth in water demand and ensure a resilient water supply for Singapore, in order to meet the long-term needs of our economy and population.

60 The proposed amendments to the PUA will provide PUB with the legislative powers to do so and incentivise industries to do even more to conserve and recycle water through introducing water efficiency requirements to water-intensive industries, and charges on large PWS.

61 The proposed amendments related to PUB’s operations will allow PUB to more effectively and efficiently fulfill its mission of safeguarding our water security and continue to ensure a safe and reliable supply of water for all.

62 Sir, I beg to move.