Electricity prices must go down

last SG · 2008-12-05T17:37:58+00:00

Any idea where I can see the composition of SP's cost?There is no talk about how to manage the other 50% of costs to help to offset the increase in crude oi...

skythewood SG

If it doesn't go down by next year, i will be very sad.

Rock^Star SG

Already announced it will go down.

Electricity tariff reduced by 25% in January 2009

SINGAPORE: Singapore households will pay 25 per cent less for their electricity bills from January to March next year. The Energy Market Authority (EMA) said because of the global downturn, fuel oil prices have fallen by as much as 40 per cent.

This is the first fall in electricity tariffs since April 2007 and the new lower tariff is certainly bringing back smiles.

"We are thinking of ways to reduce the cost of electricity. We might do away with the cooler and we may not keep the fish tank anymore," said a man in the street.

Singapore's electricity tariff is calculated using a formula. The tariff which is pegged to fuel oil prices is also reviewed every three months.

In July this year, a barrel of fuel oil was US$115. It fell to US$63 in October.

Fuel oil prices only account for 50 per cent in determining the final tariff. Power generation, delivery and other fees account for the rest.
Due to the inherent time lag for Singapore's electricity tariff formula to take effect, the fall in October's fuel oil prices and its impact on electricity bills will only be reflected next year.

Households and small businesses will pay 24.54 cents per kilowatt hour and large consumers like factories will pay around seven cents per kilowatt hour.

Lawrence Wong, chief executive (designate), EMA, said: "Energy market will still be volatile as far as EMA is concerned and we will minimise the impact of that volatility on households.

But the reality is that we will have no control of global oil movement in the energy market and no matter how we fine-tune the tariff formula, I don't think we will completely shield or insulate households from price volatility movement."

EMA said there's no guarantee that electricity tariffs will not go up after March 2009.

It said that the best thing for Singaporeans to do is to practise energy saving habits such as switching off appliances when not in use. -CNA/vm

Rock^Star SG

Raised tariffs by 22% last month. In January, reduce by 25%. Crude oil price was US$160 not too long ago, now price is US$40 plus.

They think we are fools???!!!

pearlie27 SG

Why oil price dropped by more than 40%, they only the tariff by 25%?

ArtBoon SG

Oil dropped from peak of US147 to current price of around US45.

skythewood SG

Why oil price dropped by more than 40%, they only the tariff by 25%?

if oil is suddenly free, do you think that electricity will be free too? other than the price of oil, there is the need to process it, generate electricity and pump it to you. there are other fixed cost other than the price of oil.

soul_rage SG

I see.
So when they upped the prices, they only specifically point to Crude Oil Price as almost the single factor for the increase.

And when lowering prices, they start saying there are other costs so price cannot be lowered that much?

And you believe that?

maurizio13 SG

Electricity prices will come down in January, right after teh MIW has fleeced all the sheeps for wool.

Else how you expect them to make Temasek look good after all the losses in their overseas investments.

Evangel SG

Let's take a look:

If initially we paid $100 for electircity tariff.

22% increase = $122

Now, 25% decrease = $91.50

We are better off by 8.5%.

What say you? I think the decrease is not enough, never enough haha...

skythewood SG

I see.
So when they upped the prices, they only specifically point to Crude Oil Price as almost the single factor for the increase.

And when lowering prices, they start saying there are other costs so price cannot be lowered that much?

And you believe that?

nope, they didn't say that. I did. the decrease in price almost matches the increase in price. so was the price before the increase based on price of oil long ago, or based on price of oil 2 years ago?

webben SG

Can anybody explain this 'forward' thing? I always thought that forwards was a process of locking in future goods at today's prices, and not in antipipation of prices in the future (or in the past as it seems?)

ArtBoon SG

spot price: today's price

forward price: future price

eg, if I agree to pay a 3 month forward price for a certain commodity at $x, that means in 3 months' time when I receive that commodity I will pay at $x.

webben SG

That's what I thought, but aren't forwards meant to be purchased at today's price + commision? Then the selling party makes a balancing deal, and profits on the commission. The electicity tarrif doesn't seem based on anything like 'today's' price, either at the time it went up, or now that it's going down.

soul_rage SG

Enlighten me on what you mean by decrease in price almost matches the increase in price.

The increase was based on forward oil price of US$110+ if I don't remember wrongly. So if oil prices are now down to < US$50, how does it seem reasonable to you that the price only came down by 25% when oil prices have dropped by > 50%?

dragg SG

reduced the tariff by 25% after raising 22%. thats only 3% of the original price before the increase.

but the price of oil has dropped much more than that.

skythewood SG

Enlighten me on what you mean by decrease in price almost matches the increase in price.

If oil price is zero, electricity price drop to zero? there are other factors than the price of oil, such as the salary of the workers converting the oil, cost of maintaining the power plant and so on.

still, oil is a major factor in the pricing. since you mentioned forward price was used to calculate the last increase, what is the forward price now? is it also <50? cos current price is not equal to forward price.

youyayu SG

yup..

skythewood SG

reduced the tariff by 25% after raising 22%. thats only 3% of the original price before the increase.

but the price of oil has dropped much more than that.

let's say start is 100.

after increase ==> 100 x1.22
122

after decrease ==> 122 x 0.75
91.5

any working error in my maths?

NoobUnited SG

Now TH has sold Sereya power, will there be any implications on our future electric bills?

charlize SG

Now TH has sold Sereya power, will there be any implications on our future electric bills?

It will go down.

Really.