Friday, July 1, 2011

Electricity Surges Ahead

Once again, inflation rears its ugly head in the form of self afflicted pain by the EMA who sanctioned another round of electrical tariff hike. Of course the exercise is timed after the election is over. All that talk about keeping the Singdollar strong to combat imported inflation, such as the cost of oil, seems to be just that, talk.

From today, cost of electricity will hit a 33-month record high of 27.28 cents per kWh, almost one-fifth  (20 percent) more than what SP services charged Singapore households one year ago. The Utilities-Save rebates will be temporary buffer, with the $20 or $90 handout, depending on type of qualifying HDB flat, providing on the average one month's offset in electrical bills. For the rest of the year and beyond, stock up on candles or charcoal.

EMA's FAQ on liberalisation of the electricity market implemented in Singapore includes this bit:
"Retail contestability will eventually be introduced to the remaining domestic and small non-domestic consumers (with average consumption less than 10,000kWh per month) under the third phase of retail liberalisation. The number of consumers in the third phase is about 1 million, but in terms of electricity sales, they represent only about 25% of total sales in Singapore. Phase 3 of the retail market liberalisation is currently under study."

Retail contestability means that consumers, no matter how big or small, can have a choice of their retailer, our subject of interest being pricey electricity. Changing a retailer means one can choose who sells you electricity, manages your bills, and provides services to you, presumably at the most competitive rate.

While Singaporeans wait (no time frame for the retail market liberalisation study is indicated), SP Services Ltd continues to set the electricity tariffs which are rubber stamped by EMA as the regulator. Electricity tariffs are reviewed quarterly and adjusted (usually upwards) to pass on the changes in fuel cost to consumers. In a 2004 paper, EMA boasted that "the competitive market has reduced prices for customers by 9.5% as it has created incentives for the largest gencos to switch from oil-fired steam generators to more efficient gas turbines."  Does the graph tell you something different?

All the major power plants have been sold and privatised, all the profits have been posted to some reserve account. But not one iota of the money making has trickled down significantly to relieve the relentless march of the tariff hikes. If there's any consolation, CIMB Research says job worries and pullback in consumption in Europe and the US will likely see oil prices come off. Salvation will have to come from external sources, not our own government bodies.


  1. Many countries import oil for electricity production but their electricity costs to the residential consumers are never as high as Spore's. Why is that so?

  2. EMA on its website says that 85% of gencos are already using the cheaper natural gas instead of fuel oil. This was a few years ago. By today, at least 90++% of the gencos will be using natural gas. And yet, these profiteering companies (all sold by Temasek to foreign companies) are screwing Sinkies by hoodwinking us on expensive fuel oil.

    The gencos also never bother to seek out cheaper suppliers, but always buy from regional south-east asian price-fixing cartel for natural gas and fuel oil. And PAP govt never bother to force those gencos to wake up their idea and be more efficient and find cheaper sources, even though electricity is considered a national security issue.

  3. Singapore is paying the highest electricity tariffs in the world, because:

    1. PAP allows the foreign gencos to bullshit Sinkies that electricity depends on the expensive fuel oil. But the truth is that our electricity is generated by cheaper natural gas.

    2. PAP allows foreign gencos to anyhow buy from price-fixing cartel, instead of doing due diligence and working harder to source for cheaper supplies. Foreign gencos can get away with this becoz PAP allows them to simply pass on the expensive prices to Sinkies.

    3. Singapore is the only developed country where the govt insist on public services being profiteering, at least 20% profit margins. Unlike other developed countries and emerging countries where public services are run on covering costs. Singapore has distinction of joining those corrupt governments and dictatorships in Africa to operate public services on profiteering mode.

  4. Life in Sgpore sucks!!!! An increase in 6.6% in electricity tariffs which is like almost 8 bucks increase for a 4 room HDB flat.

    Why don't I ever see my salary increase by at least 4% ???? Btw that 8 bucks can be used to buy a relatively lousy (comparing to Royal Umberlla and such) Fairprice housebrand of 5 kg rice...

    How do we ever going to survive? Pushing us deep down and under...

  5. I wonder do the greedy gluttony piggy idiots realize....that this will cause a follow up knock up effect on inflation and other expenses rental increases, more expensive products/foodstuffs sold, etc...

    It shows clearly how imbecile, leetarded and greed for greeds sakes these people in charge of preventing stuff like from this happening so easily...

    Sad for singapore.

  6. Profiteering through Natural Gas for many years. Contracts signed at high prices, do not know why. Natural gas in US in huge bear market after peaking at US$13.50 in mid 2008. Now is trading about US$4.30. This is at the lower end of a 10 year-range. Singaporeans have been taken for a ride for a long time. Government, "Do know what to say!"..TPL

  7. Maybe they need to increase the rates to help recover costs for the newly refurbished PUB building complete with new external metal cladding at Somerset. But notice they are also turning the lower floors into some commercial mall which means they don't actually need all those space to house their staff in the first place. In other words, their customers are made to pay for such refurbishments ?

    And now maybe it can explain why some govt agencies like HDB is suffering a deficit every year but they will never tell you the hard truth that it is actually SLA that is causing the budget deficit, no ?

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