Sunday, April 1, 2012

No April Fool Joke

April 1 has come and gone, so it's no joke - they actually hiked the electricity tariff again. This time by 4.3% to a new high of 28.78 cents per kWh. If there's any relief for the financially challenged, the jokers haven't mentioned it. How did Sigourney Weaver put it in Avatar? "They're just pissing on us without even a courtesy of calling it rain."

SP Services says "the increase in fuel oil price saw a corresponding increase in price of gas which is used for power generation in Singapore" i.e. they are now shifting blame from the oil price to gas price. Oil or gas, surely there are futures contracts to hedge against?

The Energy Market Authority has this blurb about vesting contracts being introduced in 1 Jan 2004. The key policy objective of the vesting contract regime was supposed to curb market power in order to promote efficiency and competition in the electricity market for the benefit of consumers. The vesting contracts are bilateral electricity contracts between generation companies and SP Services. Under the vesting contracts, the generation companies are committed to sell a specified amount of electricity (viz. the vesting contract level) at a specified price (viz. the vesting contract price). This was meant to remove the incentives for generation companies to exercise their market power by withholding their generation capacity to push up spot prices in the wholesale electricity market.

EMA reviews both the vesting contract (last updated per addendum 4 in March 2011) and the parameters used to set the vesting price every two years.

So how is it the price to the consumer is jerked every quarter? When the Natuna Gas Supply was negotiated, surely it was on a longer term than quarterly basis? After EMA engaged Cambridge Energy Research Associates (CERA) to review the tariff formula in 2009, the net result was that the fuel component of the tariff was revised based on the 3 months of the preceding quarter instead of the last month. But the vesting price is still tweaked every quarter. It's like what Gerard Ee and and his merry men did: after so much "deliberation", and paying some consultant $860,000, the Ministers are still living it up with at least a million dollars every year, thanks to the creative bonuses. And the taxpayers are still footing the bill - if not from the electricity bill, it's the ERP, COE, GST, HDB pricing, transport fares, health care charges, university fees, etc, etc.

13 comments:

  1. And it makes one wonder why they had to sell one of our power utilities company to YTL when it was supposed to make them more competitive which seems to be hardly the case here.

    And did they not recently reported that they are going to lose a few S$B of our monies invested in some foreign telco that is going to file for bankruptcy ? So much for long term investment until they go bankrupt.

    So is that the reason for everything to go up ?
    It seems they didn't even bother to explain to us the hard truth of losing so much of our investment and shouldn't someone be raising this matter ?

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  2. Singapore Power uses the profits from the consumers to invest in other companies like:
    Power Automation - a jv with Siemens in to offer engineering services in protection systems, substation control and energy management and information systems across Asia Pacific;
    Singapore District Cooling - a jv with Dalkia in September 2000;
    SPI Seosan Co-generation and Water Treatment - in South Korea provides electricity, steam and water treatment services to Samsung Total Petrochemicals Co Ltd;
    EverPower IPP - investment in Taiwan comprising a 25% stake in Ever Power IPP Company, an independent power producer.

    Profits from these investments are not remitted back to offset the cost of electricity for consumers (from which they derived the capital in the first place).

    It's like SMRT making millions from the retail business and keep harping about losses from the train operations. The joke is on the 60.1 percent.

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    Replies
    1. Seem to be their mode of operation !
      Yes, it is April Fool's Day all year round here in Singapore.
      You hsve to live with a joke-a-day from the MIW. Better laugh it off till 2016.

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  3. The problem with flawed democracy.

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  4. I thought the most basic role of the government is to safeguard the interest of its people. It is therefore wrong to protect companies like SMRT; SBS; Taxis; Power etc from continue to achieve extraordinary PROFIT at our own costs.

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  5. Is call Socialising Costs in order to Privatise Profits.

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  6. I always found it funny that the pappies love to get into arguments with our neighbours up north over water and keep espousing on the need to be self-sufficient in water.

    But then they are able to sell off power plants to earn higher profit margins without so much as a how-do-you-do. And then lock themselves in a contract that pegs our usage of natural gas to oil prices.

    Ah, the men-in-white never cease to blow my mind with their far-sightedness and meticulous planning.

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  7. What do you expect? Election is over and next one is in 2016, still far far away. Of course, they will try to jag up electricity prices as much as they can so that when next election is getting nearer they can make some token decrease to 'bribe voters'.

    Judging by election results, this trick seems to be always working, without fail! This is real sad! No wonder the government has such low respect for us!

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  8. Don't forget the salt...

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  9. Not-A-Muppet4/02/2012 1:10 PM

    http://online.wsj.com/article/SB10001424052702303816504577307521536474242.html

    Gas prices has dropped more than 50% since last year due to glut and that is a known fact. Increasingly the gas and fuel price are also breaking up. SP services and EMA (the equivalent of PTA) should really come out and present their case and facts transparently to the public. Singapore has already one of the highest electricity tariffs in the world! There must surely be reasons for that. Somebody is sleeping on the jobs or we, the people are being muppetted.

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  10. Just vote Opposition in GE 2016.
    It's a no brainer.

    Voting Opposition is like making love.
    It gets easier with practice.

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  11. Words of a wise man, or someone who used to sound wise.

    "Repression, Sir is a habit that grows. I am told it is like making love-it is always easier the second time! The first time there may be pangs of conscience, a sense of guilt. But once embarked on this course with constant repetition you get more and more brazen in the attack. All you have to do is to dissolve organizations and societies and banish and detain the key political workers in these societies. Then miraculously everything is tranquil on the surface. Then an intimidated press and the government-controlled radio together can regularly sing your praises, and slowly and steadily the people are made to forget the evil things that have already been done, or if these things are referred to again they're conveniently distorted and distorted with impunity, because there will be no opposition to contradict."

    The word 'ironical' is often misused on the internet, but I would say it would be quite apt here, no?

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    Replies
    1. It's good to know that at least one person understands what I was alluding to when I used the analogy of "making love".

      Delete