Electricity tariffs to rise 21.46% from next quarter 1 Oct to 31 Dec 08

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I just received a really bad news from my friend about the latest hikes in electricity tariff for our next quarter in Singapore! Everyone get your calculator out and find out how much you going to pay for your electricity in the next 3 months!

According to Channelnewsasia:

SINGAPORE: Higher oil prices have pushed up electricity prices for this quarter by about a fifth.

SP Services said on Monday households will see an average increase of 21.46 per cent in electricity bills, when average electricity tariffs go up by 5.38 cents per kilowatt—hour.

On average, all SP Services customers will face a 21.89 per cent increase.

For the period from October 1 to December 31, tariffs have been pegged to a higher “forward fuel oil price” of S$155.14 per barrel.

This price is 38.06 per cent higher than the S$112.35 per barrel in this current quarter.

The electricity tariff is reviewed quarterly and adjusted in line with fluctuations in the cost of electricity, and approved by the Energy Market Authority.

At a news conference on Monday, the Authority’s chief executive Khoo Chin Hean said that the increase is the highest so far this year.

- Similar to my previous post about the rising electricity tariff, I had plotted the graph yet again to reflect the “REAL” Changes of electricity tariff against the oil price with slight adjustment to the left scale to highest $40/kWh instead of $30/kWh to accommodate future spikes!

This is going to be one of the worst quarters since year 2001 for the household in Singapore with this spike in electricity prices! What are you going to do?

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  • Anonymous

    Can SP Services be more transparent on the way it calculate the peg value and how will this peg value translate into their profit? How do they account for the profit they are making out of this? Does the authority always have to guarantee that SP Services is profitable every quarter?

    Considering that oil has pulled back sharply from around USD135 to USD86 currently, why are we paying another 20% hike on electricity tariff according to their new forecast. Would there be a rebate to consumers should oil remain below USD100?

    Furthermore, about two-thirds of S’pore is being powered by gas, which is a much much cheaper alternative. Why are our fuel tariff pegged 100% to oil instead?

    Instead, the authority should have SP Services to come up with a formula that takes into account the gas prices that its using to power the country.

  • Simon Tay

    I used to work for a power generation company selling electricity and the formula for calculating the tariff is a complicated one.

    I don't remember the exact formula but that is because I don't understand it also.

    But in literal sense to understand how these works is trading.

    They purchase paper oil first in futures market (future oil contracts) and get the deliveries of oil and gas in the future.

    They had purchased the gas + oil way back in June, July and August by the traders of EMC (Energy Market Company).

    Singapore generation of electricity is currently using 80% Natural Gas and 20% on oil from (Venezuela & other countries…)

    That 20% oil fluctuation in oil cost does affects the formula for electricity prices.

    Remember Natural gas may be higher prices in the future due to global demand…and our LNG terminal is not operational to import expensive Liquefied Natural Gas…so now we haven't see the biggest hikes yet.

    The power company usually add a margin between cost of buying the electricity off the Open Market (consolidation of all power generation supplier by all companies) and selling to consumers.

    The cost of electricity cost higher due to demand & supply and also the cost of fuel to generate those electricity.

    Currently, SP Services is the only company that buy electricity and sell to you at a regulated quarterly change tariff ($/kWh) which look backwards on your previous quarter and see if consumer pay less or more then actual cost or not…and change the tariff up or down respectively.

    In the future after liberalizing the electricity market…all power companies including other license electricity retailers will join in the bidding war to get the electricity from the open market.

    They will sell to you electricity contracts like mobile contract plans…but they are Seraya, Senoko, Sembcorp, Tuas, Keppel, Island Power(not sure) and others new players if any.

    The media says it's for more competition to reduce cost and boost "efficiencies" and should bring more cost savings to consumers in the future.

    BUT…

    Remember the ENRON company that caused the energy crisis in California?

    They are under this liberalized electricity market…and any disruption of power supply means higher demand and price spikes in the open market.

    Electricity Market ….tariff moves every 30 minutes instead of current every 3 months.

    Corporate companies need to subscribe an additional telephone lines to use to read the electricity meter in real time…to be charged more "ACCURATELY" every 30 minutes without the need of human to check the meter every 2 months.

    This increases the cost of your bills (Electricity + telephone line charges) and cut probably thousands of jobs.

    Now that the oil prices had collapsed probably only temporary…we should see a decrease in electricity tariff next quarter (Jan 09 to Mar 09).

    However, if oil prices spike up again due to market rallies (probably due to all the interest rates cuts and Gov rescue efforts)……

    We shall see high fluctuation in tariff…then.

    Don't be fooled into accepting liberalizing of the electricity market at face value.

    IT IS NOT GOING TO SAVE YOU MORE MONEY…

    Temasek had plans to sell all power generation companies to "private" owners and they can do WHATEVER they wants to get more "PROFITS".

    That includes more blackouts creating higher demand spiking the electricity market within 30 minutes.

    Higher Fuel cost (Natural Gas & Oil) will cause the electricity prices to go up REGARDLESS of liberalizing the market or not.

    Let's us pray harder that more people wakes up and uses renewable energy sooner rather then later.

    The cost of solar panels is expensive now…and many says the return of investment may be low and takes almost 10 years to recover the cost of the panels.

    However, that is comparing to CURRENT electricity prices…and not future electricity prices.

    Unfortunately, I cannot see the future cost of electricity…but assuming the trend of oil & gas demand goes…up…and more aging oil fields starts to peak in production (extraction) and unable to increase in quantity any more…and decline in supply…may means higher cost in energy in general.

    Singapore may see electricity bills goes up exponentially in the future if NO RENEWABLE ENERGY is used.

    Wake up and tell everyone about this.