Tan Kin Lian's Blog: Electricity prices: 82% higher her than in Hong Kong

Monday, October 27, 2008

Electricity prices: 82% higher her than in Hong Kong

Paul Chan wrote to the Straits Times Forum about our electricity charges. Hong Kong residence pasy 17 cents per nit. Singaporeans pay 31 cents - 82% higher. Electricity in Singapore is more expensive than in USA or France.

What is happening? I recall these events but cannot remember the details:

1. Our power plants sold by Temasek to foreign shareholders?
2. Singapore hedged the price of oil, and are now stuck with the higher contracted prices?

I like to invite the knowledgeable people to put some details into what is happening here. You can also help to search Google for the facts.

20 comments:

Anonymous said...: I try to use charcoal for cooking; October 27, 2008 9:53 AM
Anonymous said...: Point 2 is true, they are using oil futures index, even though most of the electricity generated is using natural gas for years. Why? Because they said there is no gas futures index!!!

For Point 1, this may play a part although how big I am not too sure.

Anyway, whatever the increase, the most important thing is the PAP will not be politically affected. I think they have made their calculation on this and know it. After all, MM Lee once said something like there is very little about politics in Singapore that he does not know.; October 27, 2008 10:36 AM
Anonymous said...: If PUB had hedged the oil wrongly, why are we made to paid the price? With the 21% increase, it look like PUB had hedged wrongly big time.
Why our minister condon such mistake and then allow to be bear by ignorants (citizen)?; October 27, 2008 11:37 AM
Anonymous said...: 60 over percent of singaporeans give the votes to them...very strong mandate

Now we will just have to respect the voters choice....

so now just swallow the medicine no matter how painful it is...

...lets move on...what to do..??; October 27, 2008 11:47 AM
Anonymous said...: Dear Mr Tan,

In my humble opinion, the recent increase in electricity tariff by SP Services due to high fuel forward contract is unjustifiable for the following reasons:

1. Since the deregulation of the electricity market in Singapore, SP services becomes the electricity network operator to distribute the electricity for power generator companies. It supplies the electricity to the consumers and charges the general consumers (non-contestable) based on a tariff regulated by the Energy Market Authority (EMA).

2. The Energy Market Company, operator of the electricity wholesale market, published the daily Wholesale Electricity Price (WEP) on a real-time basis, as well as the historical prices sine the liberarisation of the electricity retail market. The prices are published on a half-hourly basis reflecting the supply and demand situation and other market forces throughout the day, and are readily available on its website at:

http://www.emcsg.com/n3152,56.html

The WEP date shows the following average price in the last few months:

Sept'08 ~ $193 per MWhr, or $0.193 per KWhr.
Aug’08 ~ $200 per MWhr, or $0.2 per KWhr.
Jul’08 ~ $195 per MWhr, or $0.195 per KWhr.
Jun’08 ~ $185per MWhr, or $0.185 per KWhr.

And the average price for WEP published up to 12 Oct 08 shows an average WEP of only $175 per MWhr or $0.175 per MWhr. Further, the current real-time prices as this message is composed is hovering around $161 per MWhr ($0.161 per KWhr), and is forecasted to fluctuate within a narrow range up to midnight of 27 Oct 08.

Hence it is clear that the wholesale price of electricity is on a downward trend since Sept’08 and is expected to continue dropping with the recent crash of the oil price.

3. So if the power generator company have locked into a higher 3-months forward fuel contract as explained by SP Services, how then the wholesale market continues to be on a downward trend starting from Sept’08? I am sure the power generation companies have other ways to hedge and not entirely based on the forward fuel contracts, otherwise the wholesale market wouldn’t be able to function so efficiently.

4. For industrial users or large consumers such as a large condominium with significant amount of power usage (these are known as contestable customers), they are able to buy electricity directly from the power generator company based on a variety of price plan including those that are based on the WEP (eg. pool price plan), and I know of situation in the last 2 weeks that quotation for certain price plan have been on the downward trend as well, hence it is hard to accept that SP service increased its tariff by more than 20% for the entire 4th Quarter of 2008 given the dynamics in the wholesale market.

Sorry for the rather long story but otherwise it is difficult to put across my thoughts.

Thanks and rgds

Francis; October 27, 2008 12:01 PM
Anonymous said...: China Light & Power in Hong Kong announced on 23rd September 2008 that it is cutting electricity tariff starting from 1st October 2008. Details can be in the press release found on their website at:

https://www.clpgroup.com/Media/CurRel/news/Pages/20080923_02.aspx?lang=en; October 27, 2008 12:42 PM
Anonymous said...: Just go straight into SingPower website.

No one complaint when the tariff was rising slower than oil price.

29 September 2008

ELECTRICITY TARIFF REVISION FOR THE PERIOD 1 OCTOBER TO 31 DECEMBER 2008

For the quarter 1 Oct to 31 Dec 08, the average electricity tariffs will be increased by 5.38 cents (S$0.0538) per kWh. This represents an increase of 21.46% for households. On average, taking into account the tariffs for all customer categories, the tariff increase is 21.89%.

The increase is due to higher fuel oil prices. For the period 1 Oct to 31 Dec 08, tariffs are pegged to a higher forward fuel oil price of S$155.14 per barrel. The forward fuel oil price is 38.06% higher than that of S$112.35 per barrel for the current quarter.

The transmission (grid) charges will be revised downwards with effect from 1 Oct 08 and now accounts for only 16.16% of the low tension tariff. The revised tariffs are shown in Appendix 1.

The electricity tariff is reviewed quarterly and adjusted accordingly in line with the fluctuation in the cost of electricity. If forward fuel oil prices come down in Oct 08, the electricity tariff for the Jan to Mar 09 quarter will be reduced accordingly. The tariff adjustments have been approved by the industry regulator, the Energy Market Authority.; October 27, 2008 12:53 PM
Sgbluechip said...: Kudos to SPH for publishing the letter! It is high time the SP gives us the real explaination of high electricity prices.

I suspect it is due to other than the reason of mis-hedging of high oil prices, SP is profiting from the lack of local pricing benchmark and imperfect market knowledge.

As usual, the government is not intervening until perhaps another speakers corner rally.; October 27, 2008 1:20 PM
Jon said...: You guys never play Monopoly one is it?; October 27, 2008 3:11 PM
Anonymous said...: One Taxi driver just chat and told me this....

Nowadays people are more educated and information flows freely on the internet..

The govt of any country can no longer hide information as easily as before.

The time had gone that citizens will take on any unreasonable policy or price increase in silence...

The more they increase the more people will wake up....wake up...; October 27, 2008 3:45 PM
Anonymous said...: Price increase even during recession. Guess our Govt fully aware we are going into recession yet approve increase in every necessity. Why increase? Could it be they have lost in their investments and have to account for it, the next best thing to do is to make up the losses by price increase. May sound silly, but there could be some truth in it. Lets take petrol price decrease, cab drivers told me their pump prices still the same as before. This is what i call profiterring. Issues like this CASE still 'mum' about it. Well as one says, you VOTE for them, you have to accept them as ONE FAMILY. There will be more increases to come. Sad but we are in Singapore.; October 27, 2008 4:07 PM
Anonymous said...: Hong Kongers, you guys are so fortunate to have a government that cares.; October 27, 2008 4:47 PM
Anonymous said...: Malaysians, Indonesians and Thai people, u guys also very fortunate to have a government who cares.; October 27, 2008 5:08 PM
Anonymous said...: I think the current government is "detached" from the bread and butter issue of common people. If the article in ST forum is correct, then SP has a lot of explaining to do......82% higher!

Our establishment is really losing touch....I am not an advocate of subsidy for petrol, but recently when retail price of petrol keep increasing, tax income keeps increasing as well. I think the tax rate is fixed and the absolute amount of tax revenue will keep increasing when the retail price goes up. I am not asking for them to subsidise petrol, but to "profit" from the people and businesses when retail price keeps going up is unacceptable.; October 27, 2008 6:14 PM
Anonymous said...: I understand one power plant sold to China consortium, one to Japan consortium. Pro business or pro people I don't know. Temasek is looking for buyer for the last and only one. Keep your finger cross. S'porean have billions of dollars in the savings account, more than enough to buy all 3 power plants.Rather than keep the money there and wait to get cheated by FIs one fine day, may be Mr Tan can help organised one consortium formed by S'porean only to buy the last one.; October 27, 2008 6:21 PM
Anonymous said...: Hikes now, create a big reserve (or what some calls a sinking fund) for themselves.
When the recession is really felt by everyone, SP then come in and lower rates, thus appear to look like a "hero".

This is a real but bad tactic.

Of course they can afford to "cut" later, having chalked up much profits and credits from now till then.

Leading towards their ultimate political agenda, the "cut" will come at a time not when you need it most, but when the candidates for election need it most - votes that can be bought!!!

The power supplier don't act alone. Afterall, they work and represent "The Power"... Sad state of affair...; October 27, 2008 6:42 PM
Anonymous said...: What is happening? When I was serving NS I was told guarding power stations is my duty to prevent the enemy(foreigners) from taking over the power stations. Now I consider it treason to be selling the same power stations to foreigners.
What is happening?
They make mistakes, we pay for it. They do nothing, we pay for it. They underperform, we pay for it.
What is happening?
We voted in the wrong party and are now paying for it.; October 27, 2008 10:50 PM
Anonymous said...: It is really unreasonable to increase so much electricity cost at one shot. I am not sure if I should ask this, but most of the investments like ShinCorp and other investments made by Temasek are faring so badly. Isn't it time to call for a change in leadership in Temasek. I am worried these so called elites are making the wrong decisions,and now we have to pay for it.; October 28, 2008 9:42 PM
Tan Kin Lian said...: http://www.salary.sg/2008/singapore-number-2-in-raising-electricity-tariffs/

Singapore Number 2 in Raising Electricity Tariffs

October 24th, 2008
http://www.salary.sg/wp-content/uploads/2008/10/comparison-of-electricity-tariff-increase-across-cities.PNG
Once again, we are ranked near the top of the table. But this time, it's for raising electrical tariffs!

HK electricity producer CLP Power released a media statement last month that included a table of 21 major cities ranked by how much electricity tariffs they have raised since 2005.

Thanks to our formidable Singapore Power, we are ranked No. 2 in hiking the price of electricity.

Singaporeans see an increase in electricity rates that's higher than our friends in 19 other major cities that include New York City, Amsterdam, Sydney, Tokyo, Seoul and Paris.

Ok, let's be fair. It's the price increase that puts us up there.

The article also compares the actual residential tariffs in absolute terms (in HK currency).

Our electricity is the 12th priciest - not too bad - but the following cities charge cheaper rates: HK, Sydney, Seoul, Wellington, Shenzhen, Shanghai, Vancouver, Taipei, Jarkata and KL.

Let's also not forget that CLP Power has just reduced its rates while our friendly Singapore Power hiked ours by a whopping 21% due to some fancy formula.; October 30, 2008 10:02 PM
Anonymous said...: Why should Singaporeans be paying high electeicity costs when people from other developed nations are paying less? I simply do not understand why after deregulation we are still paying higher prices than before regulation. What is happening to the cost cuttings? Should the Energy Market Authority explain this?; December 28, 2008 1:59 AM