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...

Stevenson101 SG

You may, but your reasonings will be discounted because you are not an expert in that field. I am refraining from going into specifics like supply chain and logistics, because no matter how much you research, you will still not know enough.

All I am reasoning is along what I can see. Price goes up becoz Oil price goes up. Price cannot come down that much coz suddenly we have so many other criteria of costs. This itself is already very debatable.

But thanks, it's good you bring up your line of reasoning, because it seems that based on what you say, I think we can reason that our top management is incapable. Unlike other countries, where they can keep electricity costs down when price drops, we are not able to (and went up instead). So I can only say that our authorities are weak in projecting, have the wrong policy in place, etc.

And by the way, compiling logistical data is one thing. IT is merely a tool. Being able to analyze and determine a good price based on historical data, and then having the good negotiators coming in to agree on a good price with the vendors, are all other aspects of the business. Hiring the right people will maximize the ability to determine a good price, and to negotiate successfully. So based on what you are telling me, we have a group of incapable people up there, such that prices are determined at such a high when oil prices fall. OR we have a lousy policy, such that we don't react fast enough, which tells me the authority should get the sack.

The above is likened to a situation, when all other countries are expanding their economy because the global economy is expanding, but there is one country where the economy is contracting instead. So it tells me only that the govt is incapable.

You seemed to very selective on the information you want to accept.

The fact that we are a import based country means we have to accept the terms of the export country because we have no leverage to even negotiate the price, competence has nothing to do with it. We want something the rest of the world wants as well, and we have nothing significant to give in exchange.

To simplify it, you want our resources but you got no natural resources that we want? Pay our price or we sell it to someone else.

You are basing your conclusions on what you see, but you do not want to know what sort of processes is done to give you what you see. You just assume that it's incompetence because it's not what you like to see. Would it be fair for me to say you are an incompetent IT expert because i do not understand how your process works, or i'm not used to your application yet?

In the 2nd paragraph, it demonstrates your lack of knowledge of negotiation. There are various ways of hedging the volatily of price fluctuations. One simple way is to get an agreement with your vendor, that if the price should move up or down beyond a certain agreed delta, then what you pay for the goods can be adjusted. Again, it shows your lack of understanding of running a business.

Actually, this shows more of your lack of knowledge than mine.

You are assuming you have control over the vendor, a leverage you can use to negotiate with. If the vendor has something that has huge demand (Oil, in this case), he doesn't need to sell it to you he can sell it to others because he has no problems finding another buyer for it.

Your average neighbourhood commodities shop has to raise the price if the supplier raised it. They can chose to absorb it, but they cannot sustain it for long. Would he/she be considered incompetent for conditions beyond their control?

This is the underlying rule for all business transactions, and relevant irregardless of the advancement of technology.

You have too strong a belief that Singapore has any ability to control world commodity price or even influence it in any way. It's not like we have the capbility to invade another country to gain control over the local resources whenever we like.

Can you kindly point out in this current economic crisis, which country is actually expanding their economy ? Even China and India is having problems stopping things from spiralling out of control and they have way more muscle than we have, having a stronger domestic consumer base than we have.

Again and again you claim that not having a formal degree in a relevant field means you have no place commenting on the competence of another. And yet you continue to assume that the people making the decisions are incapable, when you have no related experience in what they do.

Isn't that contradictory?

I don't regard myself as an expert, but there are rules of common sense no matter what field you're in.

Time and time again i've posted this.

It's simple facts to why Singapore's electricity bills are on average higher than the 3 above countries and yet you continue to ignore the facts,still complaining about incompetence in a field you have no prior experience in.

angel7030 SG

First of all, do not mistake me.

I am not discounting the bosses you are talking about, those without a degree. I am just saying that they probably would prefer to have one (and also easily achieve it given their talents) if during those times, they were able to afford one.

Throughout the world, the value of an education is becoming more and more impt. If you watch "The Apprentice", Donald Trump had 2 seasons where its between the Book Smart, and Street Smart, and both times he chose the Book Smart. Not becoz of the degree, but becoz the Book Smart demonstrated the same level of talent as the Street Smart, but at the same time, demonstrated a certain level of foundational basics.

I have been in working circle for about 6 years. It's true that in university, there are many things not taught with respect to outside. But, I have to stress that my knowledge picked up from work may be wide, but they are patchy bits everywhere, without a proper systematic way of stringing all of them together effectively. My accounting knowledge is self-taught due to my work with the Finance dept, and my supply chain knowledge is self-taught due to my work with the Logistics dept, but I guess all these knowledge would have been more solidified if I had a structured education to these domains.

My education in university cannot be applied DIRECTLY to work, but given my foundational technical skills picked up in my education, I am able to adapt and move easily within the IT industry. I have pretty good accounting knowledge, but I can never be a full-fledged accountant, becoz my knowledge is not structured.

And also, do not mistaken me, knowledge is good, education is also good, but you must agree with me that knowledge also bring about fears, oppressive, defensive, pride and one way school of thought.

Example, an U grad who graduated in economic may not be able to take risk better than a non graduate, she may take notice of the risks involved and prevented herself from being expose to failure resulting in her lost of pride, competency and the needs to aruge over her action. All these causes the lack of entrepreneurships in graduates who can even be having master or PhD.

"A" boy who is highly educated calculated his risks of falling down and injure himself if he tried to jump across a wide gap drain to seek freedom and glory, another boy "B" who is not highly educated to calculate so much will leap n jump off base on his instincts, even if he failed, get injured, he gained experience to try it another day, whereas boy "A" still remain as where he is,..a servant.

angel7030 SG

In Singapore, You can be a trained actors from Paris musical school, you can be graduate in art from the London drama centre...u can be a doctorate graduate in human philosophy, you can be a top student graduated in advertising and marketing...but you can never be a producer, a director, a movie maker, a risk taker and an o level holder as Jack Neo in Singapore.

4sg SG

oi u forgotten the toilet cleaner leh

angel7030 SG

oi u forgotten the toilet cleaner leh

oh yeah, talking about toilet cleaners, do u know who is the boss doing taking up cleaning contract that is on the rise even during this time of recession??? The foreign PR Bangalas are now bosses of cleaner companies, where are our graduates?

soul_rage SG

To simplify it, you want our resources but you got no natural resources that we want? Pay our price or we sell it to someone else.

Isn't that contradictory?

I don't regard myself as an expert, but there are rules of common sense no matter what field you're in.

Time and time again i've posted this.

Again you show your lack of ability to apply all the knowledge you have. I applaud you for reading, which I can see you do, but again you take things too simply.

You think that negotiation equals, who has greater weight means he has all the say, when in fact, negotiations doesn't work like that.

Negotiation works becoz 2 sides have something of interest, and would like to come to an agreement. It is not just about price, which is how you seemed to equate things simply to.

You put too much emphasis on Singapore having NOTHING, when in fact, we have a commodity called human resource or human talent. Our human talent is rated consistently in the top 10 most productive nationalities in the world. Your point 1 seems to state the fact that so long as a country has resources, we are always on lower grounds. This is again not necessarily true. Switzerland's success in the past was built on their banking system, which is not a natural resource, but a man-made strength.

You belittle human resource, when in fact, the most important resource throughout the globe is human resource, people who are talents who know how to get the best out of everything else.

We have no leverage? You are worse than me, you see your govt as being so pathetic that they have to beg others to sell to us. You think that the whole world there's only one company that sells the natural resource we need, and if we think they are too costly, we can't turn to some others?

That's why, I said again, you expose yourself to your lack of the ability to apply knowledge.

And by the way, I am not assuming the people making the decision are incapable, it's you who made them look that way. Coming back to your point 4, (I am not arguing with you on points 2 and 3 coz they are true), since LNG prices are influenced by oil prices, and since oil prices have dropped so low, then it even makes more sense for our electricity bills to be adjusted lower than just that 25%. If we are still paying that high (the same price as when crude oil was at 90+ per barrel), then it shows how incapable our authorities are.

I am just looking at what I can understand, I don't pretend to be like you, who sprouts so much information, but yet cannot seem to be able to go deeper and perform more critical analysis.

And by the way, our deep sea harbour is considered a natural resource, thereby helping us to establish ourselves as a shipping hub. Before you go around shouting that we have nothing, I urge you to give your own country some respect.

soul_rage SG

"You seemed to very selective on the information you want to accept.

Actually, this shows more of your lack of knowledge than mine.

Again you never read what I told you, and again you expose yourself to your lack of knowledge on negotiations.

You can negotiate a delta where if the price of a product goes up more than the delta, you pay more, and if it goes down less than the delta, you pay less.

It's fairer to both parties. You assume too simply of what I told you and you just jumped on it, saying that I have control over the vendor.

Since when did I talk about control? Negotiations is never about control, but about making an agreement that is acceptable for both parties

Stevenson101 SG

First of all, do not mistake me.

I am not denying the value of book smarts. I myself plan to go back to university eventually and pick up a relevant degree to improve my knowledge. I can spend hours on the net everyday and would never match someone that has been actually schooled in the relevant field.

But if Singapore is to be able to develop into a mature democracy, we must be able to accept that better arguments other than "the government is incompetent", "Temasek is squeezing us dry" because we ultimately are making remarks based on the limited information and knowledge that we have access to. And even then, our lack of experience would limit our understanding of it.

We also need to accept that how vulnerable Singapore is and not think problems are going to be solved by just assuming the person in control is incompetent and changing the leaders would miraculously solve it.

soul_rage SG

And also, do not mistaken me, knowledge is good, education is also good, but you must agree with me that knowledge also bring about fears, oppressive, defensive, pride and one way school of thought.

Agree. Knowledge can potentially paralyze a person, but at the same time, lack of knowledge may result in a person taking reckless risks, or did not minimize his risks.

Out of the CEOs you talk about making it, there are many many other wannabes who failed.

soul_rage SG

I accept your point on developing a mature democracy. However, I am appalled at the lack of questioning by the public of the govt's actions as well. We are not scrutinizing enough.

Temasek can take our reserves, invest and lose, and yet, we are not clear about their losses and what wrong decisions they have made, even though in actual fact, the reserves is yours and my $$$.

In addition, even though I disagree with the PAP, I am not one that believes in replacing them. This is because we have a lack of credible opposing voices in Singapore. However, it would be good if we could increase the no. of opposition in govt to ensure that there is check and balance on the PAP.

We all know that PAP is pro-business. It would be good if we have an opposition that is pro-citizen, to ensure that the needs of both sides are balanced.

4sg SG

Out 10 bosses in singapore, 7 never attend University

That is because our education system is geared towards production of mandarins who are more thinkers and less doers.

A flawed system where clever ppl, thinks, talks too much and distains hard work.

Stevenson101 SG

If you predict next month you will need 100 units of an item and paid 25000 for it, but when the goods arrived a month later the market price dropped to 23000 you're still expected to pay 25000 for it. Because when the deal was reached, both vendor and supplier has already agreed on 25000 because it was the market price then.

I'm merely arguing that the the LNG that is fueling our electricity now was already agreed at 90+. If the next few months electricity bills do not continue to drop, then yes you and maz are right and i would agree that i'm wrong.

I simply found it disturbing that people are expecting LNG to be immediately pegged to $50 without understanding that the LNG we're using now was agreed upon when the oil prices was 90+.

soul_rage SG

I simply found it disturbing that people are expecting LNG to be immediately pegged to $50 without understanding that the LNG we're using now was agreed upon when the oil prices was 90+.

I never did say that LNG will be pegged to $50 immediately (Oil is now < $40).

I just said that given all the 'mandarins' and top management 'talents' we have, since fuel prices are so volatile, the talented people would be thinking of how to minimize the fluctuation risks, rather than just telling us, no choice, nothing they can do. Then why do we need so many highly paid people up there for?

You and I can take over their positions already.

Also, as I mentioned before, you can always negotiate a delta, such that if the up-to-date price of 100 units of an item is +/- 10% of the agreed price, you still pay the same amount, but if it has moved beyond the 10% delta, then both sides can agree on a re-aligned price.

Such agreements are real, and companies in volatile industries do this

Stevenson101 SG

Originally posted by soul_rage
I accept your point on developing a mature democracy. However, I am appalled at the lack of questioning by the public of the govt's actions as well. We are not scrutinizing enough.

Temasek can take our reserves, invest and lose, and yet, we are not clear about their losses and what wrong decisions they have made, even though in actual fact, the reserves is yours and my $$$.

Meh i question the government decisions often enough. I'm not foolish enough to believe the government is some great bastion of virtue, but nor am i inclined to believe that it's a cesspool of sin.

But if i simply join in to rant about the government then i would never know whether your reasoning would hold water, or anyone else's. The objective of joining in the forum is to learn more about other perspectives, even those i do not agree with.

I rather enjoy this thread really.

If i simply agree with you, i wouldn't know so much about deltas and stuff yes?

soul_rage SG

Meh i question the government decisions often enough. I'm not foolish enough to believe the government is some great bastion of virtue, but nor am i inclined to believe that it's a cesspool of sin.

I rather enjoy this thread really.

If i simply agree with you, i wouldn't know so much about deltas and stuff yes?

Agree. We agree to disagree. No offence intended.

And good luck with your further education. Being inquisitive and picking up information is a really good start. I hope you will achieve your aim in the near future.

AndrewPKYap SG

Even if electricity prices come down, the despots will raise the prices of other things to feed their gambling habits.... and the the PM's husband and cursed despot's son in law's gambling addiction...

maurizio13 SG

They can have the knowhow, they certainly have the knowledge to make things more efficient they still cannot ignore geological differences and physical constraints (How much barrels you can squeeze on an oil tanker and how much oil tankers you've got)

One main difference between Singapore and the other countries (Taiwan, Hongkong, Korea) is that Singapore relies on LNG and oils for its energy generation while Taiwan, Hongkong and Korea relies on the cheaper, but far more polluting coal fired power plants. You can look this up if you want to, Singapore doesn't use coal fired power plants.

That is the main reason of the difference in power prices. This point here is crucial, because it also account for why our air is not as badly polluted as Hong Kong's.

{editted] I did a quick check, and it turns out the Hua neng owned Tuas Power is planning to build a supposedly 'clean' coal power plant. Whether it is truly clean or not i am not sure. But i just like to say this since i said Singapore doesn't used coal fired power plants.

I already stated the reason why it's at 90 now. Because the oil that we're using now was bought at $90. You need to pre order them a few months before to ensure you do not run out before the next shipment. Unless of course, that they do not furthur adjust the prices next year than your reasoning would hold weight.

How much could they make from the inflated charges? You forget they also had to pay more for the oil too, how much more could they have made?

Even if you use Natural Gas to fire the generators, it will only cost about 12% more compared to conventional coal fired generators. So if other countries charge at 20 cents per kwh, it should cost us not more than 23 cents per kwh and not the 30.45 cents they charged us from Oct - Dec 2008.

"Without emission trading the production cost of gas electricity is 51,2 €/MWh and that of coal electricity 45,7 €/MWh"

https://oa.doria.fi/handle/10024/39685

From the information above, it can be calculated that 1 kwh of electricity (natural gas) will only cost SG$0.1024 (approx.) to produce.

The difference between coal fired and gas fired generators is only 12%, therefore how to you justify the price variance 60% below. This calculation was done in Oct 2008.

What would you pay if you used exactly the same electricity (500 kwh) in Hong Kong and Singapore?

Hong Kong:

First 150 kwh: (150 kwh) x (HKD 0.959) x (Ex-Rate 0.19055) = SGD 27.41

Next 150 kwh: (150 kwh) x (HKD 1.059) x (Ex-Rate 0.19055) = SGD 30. 27

Next 200 kwh: (200 kwh) x (HKD 1.157) x (Ex-Rate 0.19055) = SGD 44.09

Total ------------------------------------------------------------------ = SGD 101.77

Ex-Rate: Exchange Rate

Singapore:

500 kwh: (500 kwh) x (SGD 0.3045) = SGD 152.25

GST 7% ---------------------------------- = SGD 10.66

Total ------------------------------------- = SGD 162.91

SGD 101.77 is the amount Singaporeans should be paying for 500 kwh usage in a free market economy, instead Singaporeans are paying SGD 162.91 inflated by the government in the form of indirect taxes probably to recover from losses in overseas investments. A stark difference of 60% between a free market economy and Temasek's (P4P) Singapore Power.

Source: Hong Kong's HEH Electricity Tariff Table

Source: Singapore Power's Electricity Tariff Table

http://politics.sgforums.com/forums/10/topics/332080?page=10

Don't be ridiculous to think that air is not free to move around and hovers in one specific location. The air quality in Hong Kong is due to it's close proximity to China, not specifically due to it's coal fired generators. Haven't you heard about the air quality in Beijing during the Olympic Games 2008? If air hovers in one specific location, we probably won't experience the smoke from burning of fields in Indonesia during farming season.

Are you related to kramnave by any chance? You two seem to have the same thinking. If you run a business, you will definitely go out of business, UNLESS you are running a necessity providing monopoly like SP.

Originally posted by kramnave 07 Oct `08, 7:19PM :

You order 100 PS3 for delivery next month at $400, are you going to sell it at $200 if prices go down next month ?

Originally posted by maurizio13 07 Oct `08, 7:48PM :

If the whole wide world is selling at $200, don't tell me you going to sell at $400?

Originally posted by reyes 07 Oct `08, 10:45PM :

wrong comparison la. if PS3 drop below $400 on market price. you still want to sell above $400?

unless you think the consumer market is stupid. in this case, the energy and govt are taking singaporean for a ride.

FYI, they don't pay for oil, they pay for natural gas.

How much could they have made from overcharging us for electricity?

A conservative estimate.

Singapore has a population of around 4.84 million, say with 5 members to a household, there would be 968,000 households.

Say each use a modest 500 kwh.

For the three months it would rake in an extra:

SG$ 61.14 x 968,000 x 3 months = SG$ 177,550,560

We haven't even factored in the commercial aspects.

Singapore Power generated 37,838 gwh last year.

http://politics.sgforums.com/forums/10/topics/332080?page=10

If they overcharge us by just $0.10 per kwh, from the data of 37,838 gwh they generated last year. They would have yielded an excess profit of $946 million for the 3 months (37,838 x $0.10 per kwh x 3/12 mths).

kilua SG

A lot of people have impression that coal powered electricity should be cheap and gas powered electricity should be more expensive.

Hong Kong does not use only coal which makes up less than 50% of CLP power. They use gas and nuclear energy as well.

Coal plants require a huge amount of capital investment which drives up the KWH cost. Gas powered plants may be even cheaper than coal!

Source

The Royal Academy of Engineering in UK

http://www.raeng.org.uk/news/publications/list/reports/Cost_Generation_Commentary.pdf

Stevenson101 SG

err...could you explain a little on your post kilua? I'm rather confused on what you're trying to say.

I'm rather surprised that Hong Kong has nuclear energy though, thanks for letting me know.

Err no.

And i don't recall saying anything to that end. My point has always been the same, if i make the order for goods to be delivered a month later, if the price dropped within that time i'm still required to pay the amount agreed upon originally. The same applies if the price increased in that time.

I won't know how the big corporations work, but small businesses to my experience has always functioned this way.I don't see how you draw the conclusion that it is a formula for business failure.

soul_rage SG

err...could you explain a little on your post kilua? I'm rather confused on what you're trying to say.

I'm rather surprised that Hong Kong has nuclear energy though, thanks for letting me know.

Err no.

I won't know how the big corporations work, but small businesses to my experience has always functioned this way.I don't see how you draw the conclusion that it is a formula for business failure.

Actually, what kilua was partially saying, was that as I mentioned, the electricity charges at such a high price, cannot be explained with other methods, other than to suspect that our govt is profiteering from its citizens (again). All the talk about Natural gases being more costly, blaming Hong Kong's use of coal as the reason for being much cheaper than us, are all highly debatable.

And history has shown that they have done this over and over again. Just take Singtel as an example. Profiteering on the poor citizens (putting burdens on them) in order to strengthen their businesses.

Small businesses can use many methods of negotiations Stevenson, the small business that thinks that they have no choice but to accept direct prices (take it or leave it deals), usually cannot survive for long, and probably will remain small.

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