Monday, December 31, 2007

Electricity Tariffs Hiked!!!

I guess you have all heard the good news about our electricity tariffs going up by 6%. For those barely staying afloat, that should be enough to sink them and motivate them to upgrade their skills, take up more OT or get a 2nd (3rd) job to make ends meet.
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There have been many of articles in the newspapers telling us that the hike is fair as our electricity tariffs is linked to the price of fuel oil. See how reasonable Singapore Power is - they understand the plight of Singaporeans and won't burden us by hiking prices unnecessarily especially when Singaporeans have already gone through many rounds of price hikes. Yes, the price of oil has increase so electricity tariffs have to go up.

From the Singapore Power website:

Q2 What are the main cost components in the tariff?
A2 Generation cost accounts for more than 70% of the total electricity cost. Fuel is the key component which takes up about 50% of the power generation cost. The quarterly tariff adjustments mainly reflect the changes in the fuel component of the generation cost

Q3 Why do tariffs increase in tandem with higher fuel oil prices when 60% of our country’s power generation uses natural gas as fuel?
A3 The natural gas contracts are pegged to fuel oil prices. Hence the prices of natural gas will also change accordingly when there is a change in fuel oil prices.


The Q&A is from 2005, today a higher % (>80%)of our electricity is generated using natural gas. Some of you find that it is strange that our tariffs are pegged to oil prices rather than natural gas prices. Here's why:


See the price of natural gas has fallen from a peak of $16 a year ago to about $7.7. Throughout 2007, it has remained relatively flat.


Singapore Power make $800-$1B a year in profits and has been active in acquisitions:

The list is above is not exhausive but you get the idea.
Isn't it great? Singaporeans are paying not just for electricity but for Singapore Power to make enough profits to takeover companies overseas. It is something that Singaporeans can be proud of.

While public utilities of other countries have are perpetually under pressure to provide electricity at he lowest possible cost to its citizens, as a monopoly Singapore Power makes enough to make billion $ acquisitions overseas. In other countries, people would clamor for the profits/reserves to be used to offset future costs to keep prices down especially in hard times but Singaporeans are more enlightened than that. They know how important it is for their power elite to expand its opportunities overseas using Singaporeans' money.

15 comments:

Anonymous said...

I know that some utility companies such as Ameren IP give out as much as 100USD for each household as a rebate to help customers.
Singapore Power? If pegged to oil price, why I never see any form of rebate for Singaporeans? It's always one way traffic, UP. Just like the Minister's salary.
The sensible man should see that the PAP must be destroyed.

Anonymous said...

Why on earth did Singapore Power get into a contract which pegs its natural gas prices to oil prices?! The Indonesians are laughing to the bank... and it's not even their doing.

Well done, Singapore Power!! Next time, read the contract before you sign.

Anonymous said...

Expect more shit in 2008!

Temasek hopes to sell all three of its power generation companies – Tuas, PowerSeraya and Senoko – by late 2008 as part of plans to liberalise the city-state's energy market.

...Temasek expected each of the three power companies to go to different buyers in line with the city-state's aim to encourage competition in the energy sector.

http://sgenergycrisis.blogspot.com/2007/10/temasek-selling-power-plant.html

yamizi said...

I thought Singapore Power has already been privatise?

So I think effectively we do not have a public agency that provides power but a private organisation?

LuckySingaporean said...

yamizi,

Right now Singapore Power is owned by Temasek Holdings. Temasek has plans to split up Singapore Power in 3 pieces and sell it to buyers. Once it is privatised, it is like the bus system, rates keep increasing to enhance the profit companies - why else would they invest. Temasek will get billions in the process of privatisation for our elites to go around the world to invest.

As for the benefits of competition among the 3 companies....do you see competition among taxi companies? Power is a necessity just like transport, we will probably cosy existence of 3 companies out to make profits.

In most cases privatisation resulted in higher prices for consumers:
http://www.modernghana.com/GhanaHom
e/NewsArchive/news_details.asp?
menu_id=1&id=VFZSUk5VMXFVVFU9

Anonymous said...

There are more than one contract on the supply of gas.
One is the one signed between the government company and the suppliers in Indonesia and Malaysia. This contract has got a long term fixed price. This is the practice throughout the world. No sane company will spend $billions to build a pipeline to deliver the gas if the price are not fixed.
The second type of contract is between the power company and the original company which sourced the gas. This gas price for this second contract was pegged to the world oil price and is a decision made by the Singapore government who control companies on both sides of the contract. The reason why this is done is well illustrated in ur very good article. To me it is a way to cover up their cheating of Singaporeans in the pricing of electricity. They got the gas at a very cheap price. Why the benefits of this cheap gas which they managed to lock in are
not passed onto Singaporeans is what Singaporeans have to their ministers and mps.

21st dec 2012 said...

Let's us warmly welcome 2008 with more hikes.

Anonymous said...

Yeah our PM just said he will implement means testing for hospital bills. That is it folks, good luck when u are ill.

Fifthgraper Thinker said...

Please do not exploit the weak and poor for your wealth.

Oh yes, also do not any how pass gas!

My teacher say one

Thank you.

yamizi said...

Lucky, thanks for the info, all along I thought that it has already been privatised.

I guess literally money makes the world go round ya?

And Happy New Year to you and your family =)

bruce said...

please enlighten me: why are the gas contracts pegged to oil prices? aren't they in different markets? even if oil price has gone up in jan 2008: there are 2 scenarios that does not necessarily lead to increase in price of electricity
1)the electricity produce in jan 2008 could be from oil contracts that have been locked into low prices.i tot sg is the 3rd biggest market for oil trading after new york and london.i'm sure singapore power has brilliant oil traders that are good in sourcing for lower prices.
2)if price of oil comes down in june 2008, will singapore power reduce the electricity bill?

i hope someone can answer my questions. thanks

Anonymous said...

Lucky,

I thought Singapore Power has already divested the power generation companies since 2001/2002:
http://www4.singaporepower.com.sg/publish/PR/Files/Approve/PR23_9244.html

Anonymous said...

Gas price is tied to oil price probably because they are substitutes ?

I don't see anything wrong with the SP overseas acquisitions , those companies are gas and pipeline companies , they are probably just covering their bases in case something really happens to disrupt our gaslines to neighbouring countries. Contingecy plan people.

It would be another matter if those companies have absolutely nothing to do power and gaslines.

onlooker said...

Lucky,
I'm worried. This is something our esteem leaders mention before:" if the price for certain good goes up, Go for the cheaper substitute" I been buying foods from bargain price SS (so called NTUC rival. it is all for us). But I been thinking lately, Should I consider getting a Cheaper CIVILian SERVANT too? MP(Maria Peanuts) has been increasing her pay thru my mother (MOM) I'm afraid that if she leave the quality of life might drop like my wife and daughter have to become maid for a few day.But thing got worse, I decide to fire MP after my wife and I voted MP out.But MOM need a SERVANT, my wife take care of her and she did quite well now.guess nobody is indispensable. But should I go Cheaper next time I hire? Because it turn out that MP been using money meant for buying food to ease her spending.

Anonymous said...

Bloody unbelievable! No one takes notice that Singapore Power is happily spending billions to acquire foreign assets. On the other hand, the company claims that they cannot cope with the oil price increases. This total mismanagement (to put it politely) is also enough to bring down a government, if only we had enough opposition MPs in parliament! We might think that Singapore Power's foreign acquisitions might be used to compensate for the oil price increase, so as to offset the final burden the consumer has to bear. Too bad, we ordinary people have absolutely no idea, because we have no one to speak for us.