Monday, 8 April 2013

Info on electricity tariffs readily available online

MR CHEANG Peng Wah asked how electricity tariffs are set ("Shed more light on electricity tariff hikes"; Tuesday).

He may not be aware that the process for reviewing the electricity tariff is well-publicised. Information on how the tariff is determined and its component costs is readily available on the Energy Market Authority (EMA) and Singapore Power websites. This has been the practice since 2010.

The electricity tariff has three main cost components. These are the costs of producing the electricity (which comprise both fuel and non-fuel costs), grid charges for delivering the electricity to consumers, and other miscellaneous charges such as billing and meter reading fees.

Since the electricity market was liberalised in April 2001, the EMA has applied both regulation and market competition to incentivise the industry to reduce costs and achieve higher efficiencies.

While inflation from 2001 to this year has exceeded 30 per cent cumulatively, grid charges have fallen by 14 per cent. In addition, electricity tariffs have increased by 34 per cent during that period, compared with a 220 per cent increase in fuel prices.

As fuel costs make up more than half of the tariff, a 220 per cent rise in fuel prices would translate into the tariff increasing by more than 100 per cent if there were no efficiency gains from regulation and market competition.

Going forward, the EMA will continue to enhance our regulatory framework to promote competition and productivity improvements, so that cost savings and efficiency gains can benefit all consumers in Singapore.

Juliana Chow (Ms)
Director, Corporate Communications
Energy Market Authority
ST Forum, 6 Apr 2013

Shed more light on electricity tariff hikes

SP SERVICES announced that electricity tariffs will increase by an average of 1.5 per cent from this month for the next three months. It said the increase is due to rising fuel prices and additional infrastructure investments to meet increasing electricity demand and replace ageing assets.

Electricity tariff adjustments affect all Singapore residents.

It is odd that bus, train or even taxi fare adjustments - which affect fewer people - are subjected to much closer scrutiny, with well-publicised guidelines and formulae, while the Energy Market Authority continues to approve SP Services' frequent tariff adjustments, which are opaque processes with undisclosed guidelines.

Equally important, I cannot understand why my utility bills ballooned to over $300 for my small three-member family, from just over $100, in no more than 20 years, even though our lifestyles and utility consumption patterns did not change much.

Cheang Peng Wah
ST Forum, 2 Apr 2013

Wholesale Electricity Prices, Tariffs May not Move in Tandem

In his letter, “Why did electricity tariffs rise when wholesale price had fallen?” (April 1), Mr Raymond Chiam asked why tariffs increased in the second quarter when wholesale prices fell in February.

Wholesale electricity prices are not used to set electricity tariffs. As such, the two do not necessarily move in tandem.

Wholesale prices are determined every 30 minutes and fluctuate according to demand and supply conditions in the electricity market. These prices have fallen in recent months due to an increase in generation capacity, which increased competition in the market.

There were periods in previous years when market conditions were tight, and wholesale prices had increased while the regulated tariff went down.

Unlike wholesale prices, the electricity tariff is reviewed quarterly, and forward fuel prices have been on an uptrend since January, peaking at $127.50 per barrel in mid February before receding slightly last month.

This led to a 2.9 per cent increase in the fuel cost for generation companies. As a result, the tariff for the second quarter increased by an average of 1.5 per cent compared to the previous quarter.

We thank Mr Chiam for the opportunity to clarify these points.

Juliana Chow (Ms)
Director, Corporate Communications
Energy Market Authority
TODAY, 6 Apr 2013

Why did electricity tariffs rise when wholesale price had fallen? (1 Apr)

The latest data shows that the wholesale electricity price fell to S$151 megawatt per hour in February, the lowest monthly level since September 2010.

Can the relevant authority explain why electricity tariffs have been raised, and not lowered, for the April to June period?

Raymond Chiam
TODAY, 1 Apr 2013

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