Electricity tariffs: Daily gas prices fell by only 3%
From Juliana Chow, Director, Corporate Communications, Energy Market Authority, TODAY Voices, 8 Oct 2014
Mr Narayana Narayana asked about the relationship between electricity tariffs and fuel prices (“Explain gap between drop in tariff and oil prices better”; Oct 6).
The tariff consists of two main components: The fuel cost and the non-fuel cost components.
The latter includes capital and operating costs of generation companies and grid charges; the former refers to the cost of natural gas, the dominant fuel source for power generation here.
In Singapore and other Asian countries, the cost of natural gas is linked to oil prices. Based on the published methodology, this quarter’s fuel cost component is taken from the average daily gas prices from July 1 to Sept 15, converted from US dollars to Singapore dollars.
It is not correct to compare only two data points using spot crude oil prices at the start of the period and at the end.
As fuel price movements have fluctuated between July 1 and Sept 15, the overall reduction in average daily gas prices is about 3 per cent, not the 15 percent figure Mr Narayana used in his calculations.
This, in turn, translates into a proportional reduction of 1.6 per cent, since fuel costs make up about 50 percent of the tariff. We thank Mr Narayana for his feedback and the opportunity to clarify the relationship between electricity tariffs and fuel prices.
Explain gap between drop in tariff and oil prices better
From Narayana Narayana, TODAY Voices, 6 Oct 2014
Singapore residents will be happy SP Services has lowered its electricity tariff for this quarter, and the Main Components of Electricity Tariff are set out to suitably educate the lay consumer.
From Narayana Narayana, TODAY Voices, 6 Oct 2014
Singapore residents will be happy SP Services has lowered its electricity tariff for this quarter, and the Main Components of Electricity Tariff are set out to suitably educate the lay consumer.
The list appears to fall short, though, of explaining why the reduction is 1.6 per cent, while crude oil prices have fallen in the past quarter from US$115 (S$147) to below US$100, or about 15 per cent.
It would be interesting to learn who the main beneficiaries of the drop are and, especially, why little of it percolates down to the general public, to whom it should logically be passed on.
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