Electricity tariffs increases – Is Singapore’s energy market prices one of the world’s most expensive and most profitable in the world

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SP Services announced last week that for the period from 1 October to 31 December 2018, electricity tariffs will increase by an average of 2.1 per cent or 0.48 cent per kWh compared to the previous quarter. The utility services provider said that this was mainly due to the higher cost of natural gas for electricity generation compared to the previous quarter.

For households, the electricity tariff will increase from 23.65 to 24.13 cents per kWh for 1 October to 31 December 2018. The average monthly electricity bill for families living in four-room HDB flats will increase by $1.76.

The electricity tariff consists of the following components:

  • Energy costs (paid to the generation companies): This component is adjusted quarterly to reflect changes in the cost of power generation.
  • Network costs (paid to SP PowerAssets): This fee is reviewed annually.
  • Market Support Services Fee (paid to SP Services): This fee is reviewed annually.
  • Market Administration and Power System Operation Fee (paid to Energy Market Company and Power System Operator): This fee is reviewed annually to recover the costs of operating the electricity wholesale market and power system.

For this quarter, of the four components in the tariff only the energy costs increased – and the increase is 0.44¢/kWh or 18.37¢/kWh, which is 76.1% increase.

 

 

 

SP Group said that it reviews the electricity tariffs quarterly based on guidelines set by the Energy Market Authority (EMA), the electricity industry regulator, and that the tariffs have been approved by the EMA.

Commenting on the electricity tariff increase, prominent socio-economic commentator Leong Sze Hian asked if “our electricity prices one of the most expensive in the world, and the provision of electricity – one of the most profitable?”

He said, “according to “Electricity prices around the world” – the USD per kwh for various countries are as follows:

Singapore 0.165

Canada 0.107

China 0.086

Hong Kong 0.138

Indonesia 0.104

Malaysia 0.061

Norway 0.16

South Korea 0.117

Taiwan 0.094

Thailand 0.117

United Kingdom 0.224

United States 0.129

So, after taking into account the relative incomes of the lower-income, and Purchasing Power Parity (PPP) in different countries – does Singapore have one of the most expensive electricity prices in the world?

Loeng also pointed out a Channel NewsAsia article “Sizzling competition, ‘encouraging’ sign-ups as electricity market opens up in Jurong”, which quoted a a consumer that signed up with independent provider Ohm Energy saying, “with his new 12-month plan charging 16.95 cents per kilowatt hour (kWh), almost 5 cents lower than SP Group’s current electricity tariffs“.

Leong asked if this meant “that the price difference is 23.5 per cent (16.95 divided by 22.15 cents)?”

He added: “So, can you imagine the humongous profits that may have been made in the past? With the estimated annual profits of about $1.6 billion from providing electricity in Singapore – are we looking at tens of billions of profits in the past decades?”