Power tariff peg to fuel prices

Power tariff increases in line with fuel prices: EMA
MR LEONG Sze Hian ('Power tariff peg to fuel prices raises question over latest hike'; Forum Online, Tuesday) asked why the electricity tariff's fuel component increased by 113 per cent from January 2007 to this month, when fuel prices increased by only 80 per cent.

His figures are incorrect. The electricity tariff's fuel component rose by 80.6 per cent, from 9.3 cents/kilowatt hour (kwh) to 16.8 cents/kwh, from January 2007 to this month. This was in tandem with the fuel price increase during that period.

While Singapore is a price-taker when it comes to fuel costs, the Energy Market Authority (EMA) has worked with the power industry to lower non-fuel costs where possible.

For example, we liberalised Singapore's electricity market in 2001 to encourage more competition. This incentivised the generation companies to replace their oil-fired steam plants with more efficient gas-fired power plants. Without this development, the electricity tariff here would have been at least 15 per cent higher.

Since 2008, Singapore Power has reduced its grid charges and its fees for providing billing and meter reading services by more than 10 per cent and 20 per cent respectively. These savings were achieved through productivity improvements and efficiency gains.

Mr Leong suggested that the non-fuel component be reduced as the capital costs of the power plants have already been recouped. This is not an accurate reflection of the situation.

To ensure that our power system is able to meet Singapore's rising electricity demand, continual investments are needed to maintain and upgrade power generation and transmission infrastructure facilities. Such recurrent costs are reflected in the non-fuel component of the tariff.

The EMA pegs the non-fuel cost for power generation to the cost of the most efficient generation technology in our system, the gas-fired power plant. This helps to ensure that power companies here invest in the latest and most efficient technologies available, so that we continue to realise efficiency gains that can be passed on to consumers.

The Government has introduced a permanent GST Voucher - U-Save from this year to help lower- and middle-income HDB households offset part of their utility bills.

Households in one- and two-room HDB flats will receive a rebate of $260 per year, which will help offset about three to four months of utility bills on average. Three- and four-room households will receive $240 and $220 per year respectively, enough to offset about one to two months of utility bills.

Eligible households will receive their GST Voucher - U-Save every six months, in January and July.
Juliana Chow (Ms)
Director, Corporate Communications
Energy Market Authority
Straits Times Forum, 7 Apr 2012

Power tariff peg to fuel prices raises question over latest hike
THE electricity tariff has increased ('Electricity tariff going up again'; last Saturday) by about 44 per cent from January 2007 ($20.02) to this month ($28.78), against an 80 per cent increase in fuel prices, that is, this month's price of $136.37 per barrel against January 2007's $75.73.

As the Energy Market Authority's website states that the non-fuel cost, which reflects the cost of generating and delivering electricity to homes, has remained largely unchanged over the past few years, why is it that the fuel component of the tariff has increased by about 113 per cent, from about 8 cents in January 2007 to 17 cents this month?

As the electricity tariff is pegged to fuel prices, as we have been told, why did the fuel component increase by about 113 per cent, against an 80 per cent increase in fuel prices?

Also, as the non-fuel cost includes the power generation cost, which covers also the capital costs of the power stations, and several of our power generation companies have been sold to foreign firms, shouldn't there have been a reduction in the non-fuel component, as the capital costs of the stations may have already been recouped?
Leong Sze Hian
Straits Times Forum, 3 Apr 2012