SINGAPORE: Gas and electricity prices are set to take another leap, adding to the financial burden faced by Singaporeans amidst the escalating cost of living, inflation, and the recent Goods and Service Tax (GST) hike.
The authorities have announced that local electricity rates would experience a surge in the coming three months, primarily driven by rising energy prices. The average electricity rates for the next three months will increase by an average of 1.2 percent, equivalent to 0.31 cents per kilowatt-hour.
Effective from July 1 until the end of September, the electricity fee per kilowatt-hour for household users will rise from the current rate of 27.43 cents to 27.74 cents. This increase, excluding GST, will result in an average monthly electricity bill for a four-room flat rising by approximately $1.14.
In addition to the electricity price hike, residential gas bills will also witness an upward trajectory during the same period. From July to September, the price of residential gas per kilowatt-hour will surge by 0.23 cents. As a result, the gas price before tax will rise from the existing rate of 21.68 cents to 21.91 cents.
The escalation in gas prices has been primarily attributed to a quarter-on-quarter surge in fuel costs. The cost of obtaining the necessary resources to generate gas has risen, thereby necessitating an increase in the price of gas for consumers.
While the increase can be considered minimal, such price hikes are particularly concerning for the bulk of middle-class Singaporeans, who are already grappling with the financial implications of an increasing cost of living.
Singaporeans are now faced with the challenge of managing their expenses efficiently as essential utilities become more expensive. With gas and electricity being fundamental necessities, individuals and families will need to review their consumption patterns and make adjustments where possible to mitigate the impact of the increased costs.
As households continue to face the pressure of escalating prices, there is a growing call for the government to provide assistance or implement measures to alleviate the burden on citizens, especially those from lower-income groups.
Responding to concerns about the staggering surge in power prices, the Energy Market Authority (EMA) recently announced its decision to cap wholesale power prices starting July 1, utilizing a formula based on natural gas and generation costs.
The decision follows a whopping 3,000 per cent price increase this year, despite a significant decline in the cost of liquefied natural gas (LNG), Singapore’s primary fuel source.
Critics, however, have argued that the move comes two years too late.
Two years ago, the sudden and severe price hikes resulted in the bankruptcy of numerous independent retailers, highlighting the urgent need for regulatory intervention. The prolonged price volatility has also discouraged utilities from investing in additional generation capacity, exacerbating the persistent shortage of power supply, according to the EMA.
Last month, the market witnessed an unprecedented spike, with prices reaching a whopping $3,594 per megawatt-hour during daily trading. This surge was triggered by the shutdown of a power plant at Jurong Island for a turbine upgrade, coinciding with unusually scorching weather conditions.
Meanwhile, the cost of LNG has plummeted by a substantial 86 per cent since March 2022, further highlighting the need for swift regulatory action.
Critics argue that the delayed response has severely impacted businesses and households, leaving them vulnerable to skyrocketing electricity bills. Many have struggled to cope with the financial burden caused by exorbitant energy costs, leading to widespread concerns about the stability and affordability of electricity in the city-state.
In an attempt to rectify the situation, the EMA has engaged in consultations with industry stakeholders and utilities to explore effective strategies for mitigating the drastic price fluctuations. Additionally, the authority has expressed its intention to launch a request for project proposals in the latter half of this year and has said it is also open to the possibility of building additional generation capacity under governmental supervision.
However, while these measures aim to stabilize electricity prices and ensure a reliable power supply, skeptics argue that the action is long overdue. Critics question why the authorities did not take prompt action to prevent the financial distress faced by independent retailers and the detrimental impact on consumers.
For some, the two-year delay in implementing stricter regulations has resulted in a loss of confidence in the market’s stability and raised doubts about how effective the proposed measures can be.
All eyes are now on the execution of these measures, even as doubts about the effectiveness of this delayed action continue to ripple.
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