Tan Kin Lian's Blog: Reply to SP Services: Don't shoot the messenger

Sunday, November 02, 2008

Reply to SP Services: Don't shoot the messenger

Posted at request of Vincent Sear

Editor
Today paper

I refer to the article November 1-2, 2008: "SP Services" Don't Shoot The Messenger."

The essence of the matter is, even if SP Services is just the middleman or "messenger" as it now calls itself, how can electricity tariffs be based on US$155 per barrel of oil as announced by SP Services itself it September 2008, to justify a 22% price hike based on "forward pricing"?

Now, SP Services is claiming "average price." Whatever, be it forward pricing or average price, how come Singapore households and businesses are billed based on a much higher price? Oil price hit a peak of US$147 per barrel in July 2008 and has been falling thereafter.

How come Singapore consumers are billed based on US$155 per barrel for the quarter of October to Decemeber 2008 when oil price never hit that high? What's going on between the power generating companies (gencos) and SP Services and the Energy Market Authority (EMA)?

Oil price is now about US$70 per barrel or below. Can Singaporeans expect a corresponding 55% cut in tariffs and bills?

Vincent Sear

19 comments:

Anonymous said...: Is it possible that somebody made a mistake to close the forward contract at $155 and the consumers now has to bear the consequence of that mistake?; November 02, 2008 9:16 AM
Anonymous said...: well said, and is people like you who dare challenge the 'authority' that shall allow democracy and the plight of the commonmen be heard, when things are up, they raise but when down, nothing is benefited to the society of the common men, i hope to witness and acknowledge the modern day 'robin hoods' like you and Mr Tan, thought having said, m not in Singapore always to take this 'shit' of the common authority that pushes all increase with whim and fancy upon their very own citizens.!!; November 02, 2008 9:48 AM
Anonymous said...: Do you think a protest petition will do any good? As a retiree, I am so tired of citizens having no say over monopolistic price hikes. I don't have the luxury of using air conditioning even on very warm days. I reduce my lounge lighting to 18watts (energy saving), so much so that I can't even read the newspapers with this light. What else can I cut down on? I am sure the millionaire ministers have no worries about their monthly bills for such basic amenities.
chew; November 02, 2008 9:58 AM
Anonymous said...: I suspect that SP services has been speculating in the energy market and bet wrongly that oil prices will keep on rising. Therefore there is a need to use wierd measures like "average pricing" or "forward pricing" to cover it up.

Is there any regulation in this respect?

2chan; November 02, 2008 10:19 AM
Parka said...: Basically, they can charge whatever they want.

If they want to peg, I suggest a daily peg. Something like the stock market where prices are shown daily. There's nothing more transparent than that.

In fact, the SMRT and SBS should also peg to daily rates and show it on their big LCD screens on the platform.

That way, people have absolutely no way to complain. They know exactly what they are paying for.

Now, we don't even know what we are paying for.; November 02, 2008 12:46 PM
Unknown said...: Tks to Vincent n Tan KL,we wonder how many Singaporean read>understand>take action on this subject re:SP Services itself in September 2008, to justify a 22% price hike based on "forward pricing"?...

Oil price is now about US$70 per barrel or below. Can Singaporeans expect a corresponding 55% cut in tariffs and bills?apparently this is good to SP local consumers but not so good for ..?; November 02, 2008 1:21 PM
Everlearning said...: S'pore Power is owned by Temasek Holdings. SP owns assets overseas: Australia, Taiwan and South Korea. SP AusNet is a subsidiary of SP. Dallas-based TXU in Australia???

Could it be they over-committed and over-stretched in their acquisitions of assets overseas???; November 02, 2008 4:00 PM
Anonymous said...: If they are going to reduce the price, I am fine. The recent fuel is reduced to US$70, then why are they increasing the electricity price? They will reduce it later right? If not, I think it is unreasonable.; November 02, 2008 4:03 PM
Anonymous said...: This is probably a hedged forward option pricing done during the USD147.00 period. In a forward hedge securities eg futures, you agreed on a future price for delivery of oil regardless if the price goes up or down in future. And since price did came down, you still taking delivery at USD155.

Strangely enough, I thought I read somewhere the electricity is product in little dot from natural gas pipes from indonesia? so whats has oil price got to do with that?; November 02, 2008 4:23 PM
Anonymous said...: Thanks for posting my comment. :)

Newsprint forums are very "competitive" for space. There's no high hope that it'd get published there. ;); November 02, 2008 10:59 PM
Anonymous said...: It's utterly very frustrating that nothing can be done on our part to voice this frustration.
It's time for all of us to come together to do something but how many have the courage to do it?; November 03, 2008 1:15 AM
Anonymous said...: Could SP Services provide a breakdown of the increases levied by each of the component as follows:

B4 After % increase
EMA
SP
Genco

With this, we can see clearly where the bumper profit goes to

Regards; November 03, 2008 11:48 AM
Xtrocious said...: To Parka, you said...

"Now, we don't even know what we are paying for."

Oh yes we do - we pay to get screwed big time...; November 03, 2008 4:33 PM
Anonymous said...: POWER, people, its about POWER.

No Power No talk.; November 03, 2008 5:08 PM
nhyone said...: Just a minor correction. It's S$155 and not US$155.; November 03, 2008 7:34 PM
Anonymous said...: Please note that the increase is only affecting HOUSEHOLDS. Businesses do not bare this. Why the discrimination? Check www.spservices.com
The SS; November 04, 2008 10:13 AM
Daniel Ling said...: Hi Mr Tan, i hope you do not mind but i've put a link on my blog. I think these sort of news need as much circulation as possible. Though i doubt my blog has any readers.

http://informationreadbyme.blogspot.com/2008/11/reply-to-sp-services-dont-shoot.html; November 04, 2008 11:06 AM
Ravi said...: My thoughts here: http://singaporesocialactivist.blogspot.com/2008/11/just-messenger-then-sp-services-should.html; November 08, 2008 3:44 PM
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