Sunday, October 05, 2008

Explaining the 21.5% Electricity Tariff Hike.....

BREAKING NEWS : Someone posted in the comments section that Hong Kong has reduced tariffs by 3%. Yes, I heard about it and the people of Hong Kong are so disappointed that the cuts are so small.

Whenever something is hiked in Singapore, we get a long justification why it is necessary. In this case, we are told that it is due to the high price of oil. Given that the oil price has collapsed in recent weeks, the explanation has to go a bit further to say that it is based on the "forward" contract and not the spot. But then our electricity is generated using natural gas not oil ....and the explanation is that Singapore signed contracts for natural gas from Indonesia based on the price of oil because the price of natural gas is not easily determined (nobody in govt heard of Nymex Natural Gas Futures?). Nevermind lah...whatever it is, there is a logical explanation.

"The scope for savings is high considering that power consumption patterns show that 40 per cent of households, from one-room flats to landed properties, use more than the monthly average" - EMA chief executive Khoo Chin Hean

"Err...Mr. Khoo the AVERAGE in a normal distribution is the point where about half the people will use more than the average. If people start cutting down we will just have a new lower average with 40% above average! " - Lucky Tan.

Half the people in the class is shorter than the average - there is scope to feed the shorter people more so they can grow much do we pay our superscale civil servants to say such intelligent things? But it is absolutely true Singaporeans will end up using less electricity because many cannot afford it anymore. Singapore Power makes about $1B a year and has accumulated enough profits to purchase major power assets in Australia - a country several times the size of Singapore. The real reason behind the electricity tariff increase is that Singapore Power cannot charge less because it cannot afford to make less profits. The oil price is falling yet Singapore Power cannot hold back the increase for a few just has to hike the tariffs even when many Singaporeans already cannot afford electricity before the hike:

The ordinary citizens of Singapore have to keep working harder to fund our GLCs and help to preserve their profits. They can use the profits to acquire overseas assets to create more job opportunities for our elites. The cycle of neverending price hikes has a common theme - Singaporeans pay prices they cannot afford to maintain the profit margins of our GLCs which they cannot afford to cut. Your poverty is their wealth. Your lack of savings is their reserves. While you pinch on food and electricity, our govt losses a few billion on Shin Corp, a few billion on UBS, Citibank....and it can now turn around to tell the people it cannot afford to help you with those hikes.


AlphavilleSG said...

The average person aren't always able to comprehend how geniuses work...

The EMA of SG Act states it function as

...promotes and maintains fair and efficient market conduct and effective competition or, in the absence of a competitive market, which prevents the misuse of monopoly or market power;

Ignoring the cock that EMA is saying, when the utilities up THEIR prices (as they so chooses, just like PTC argues for the profitability of our two transportation operators), Gahmen introduce subsidies and you the tax payer bleeds both ways, with the bills and the drain on tax revenue, while PRIVATE power companies cream off profits!

Is it not recent that Ho Ching managed to flog Senoko Power? I bet a lot of the dealings was done on the bed!

And I am very sure Singapore's power grid is dependent on that natural gas pipeline from Indonesia, since the last time someone turn it off, half the island went dark.

Well Done! Kudos to the PAP leadership! You can go fuck off come next election!

yamizi said...


What is the next hike do you foresee?

Anonymous said...

i am wondering why someone rekindled the notion of sg re-merging with a hinterland..could it be it is foreseeable that here is not sustainable for the poor people in the long run

Anonymous said...

To bad the average Sporean does not have the guts to vote out the pap.

Anonymous said...

I wonder what would it take before the average Singaporean gets so fed up of being milked dry that he actually dares to vote against PAP?

Onlooker said...

Yet The Salary of those "CEOs" kept increasing up, up and away...

Anonymous said...

Someone once wrote "Pls lah PM LHL don't give us any more freebies.The moment u give, the next moment there will be a hike"
This is very very true and so typical of the PAP govt!Immediately after handling out the 2nd installment of Growth Dividends,comes this 21% electricity tariff hike. This govt. is just so"chow kwan "...Give u a chicken drumstick but demand a whole chicken back. Where is the conscience? Wait for the next election...

Anonymous said...

lucky what's your email?

I need your help for a blog that's im starting, and I think you could help me out.

much thanks,

frustrated singaporean living overseas.

(just post your email out in the comments here and i'd pick it up later)

Anonymous said...

er... lucky tan i think you have mixed up median and average in this article....

Anonymous said...

HK reduces tariff

CLP Power to Reduce Electricity Tariff By 3%
Thursday, September 25, 2008 3:53 AM

(Source: Datamonitor)Electricity network operator CLP Power Hong Kong has announced that its electricity tariff will be reduced by 3% for all its customers in Hong Kong, starting October 1, 2008, when the new scheme of control takes effect.
The 3% total tariff reduction, which will be realized in customers' electricity bills, is a result of a reduction of 10% in its net basic tariff, moderated by the effect of fuel clause charge increases.

CLP's tariff is made up of two major components. Basic tariff is a cost of service to customers for investments and operating costs necessary to keep the supply of power running to meet customers demand. The fuel clause charge, however, reflects the cost of fuel used for generating electricity and is directly passed through to customers.

Betty Yuen, managing director of CLP Power, said: "At a time when energy prices have been surging up across the world, CLP has been working hard to control the effects on our customers. Despite fuel price increases of about 200% in the past few years, the increase in fuel charges passed on to our customers has been limited to a level that is more than offset by a cut of 10% of the net basic tariff."

Anonymous said...

Sadly Lucky is spot on with average and median.

In fact some1 pls tell Tar-man that reducing the profit is not equal to subsidy.

Anonymous said...

We did.

Many of us told the Tartman that. But he thinks we are idiots.

Anonymous said...

We are so BLOODY lucky!

Anonymous said...

I hate, I REALLY HATE the ones offering the reason for the Electricity Hike than the Reason they have cited.

These skunks deserve no respect.


Anonymous said...

STI 2168.04 -129.08


STI 1000 by end of the month?

Anonymous said...

What do we call this?

Asian Financial Armageddon? STI -60%, we just about there. The SGD still looking good though.

Guys watch out for the Koreans, news just out that they are the 'weakest link' with the highest bank loan to deposit ratio in Asia.

LuckySingaporean said...

Does look bad. I decided to hold back purchases for some time. I took a look over the weekend and simply can't believe the valuation of some of the 2nd liners and smaller cap stocks. Among those I'm familiar with and followed for several years, the current pricing is only justified if we get a multi-year recession that will drain the cash from the companies. Some of these companies have been in business for more than 2 decades.

I've been through a number of recessions. I could always see some hope of getting out of the mess. Even in the Asian Crisis, in the darkest hour I was able to see some silver lining. This time my instincts tell me is different. My philosophy going into this is "prepare for the worst and hope for the best".

I'm always of the view that the markets overshoot on the downside and upside. The problem this time is we have a crisis of the magnitude to match and I can't tell if we have overshoot on the downside yet.

This time it is going to very sharp. Take the example of shiiping companies right up to the last quarter they were announcing 100%-200% profit growth. But this quarter the BDI (Baltic Dry Bulk) collapsed and they are going to have losses or a profit collapse. All within a span of 3 months.

Still, it takes an optimist to make money - making money is hard, it is hard to be an optimist.

Anonymous said...

hmm no short selling during recession? Left CFDs to short?

Whats your view on this Lucky Tan?


Economist with a Heart

Anonymous said...

LOL!!! Uniquely Singapore!

Anonymous said...

They increase the tariff and gave explanations where only few can understand. Then those MIW show how caring they are, understand the plight of the citizen and decides to give utility rebates.

We the pleasants got whipped till bloody by the MIW and then give first-aid by the same MIW.

It is another typical case of right hand gave, left hand take back.

Anonymous said...


Singtel ups fixed telephone line. Reason given - rising copper prices.

In back pages of ST, copper prices have fallen with all other commodities to its lowest.

who is right, who is wrong?

Simon Tay said...


It's time for us to think alternatively how to resolve problems now.

Singapore and HK uses different types fossil fuel for power generation hence we cannot compare apple to apple.

The problem now is Indonesia is having depleting natural gas...and almost depleted oil..(making them net oil importer since 2004). The Batam is having regular blackout same as main land Indonesia due to local domestic demand.

Singapore remain bright as day at night is due to the high price that we pay.

80% natural gas...20% oil from our neighbors.

Backward looking to the spike in oil prices last quarter is the reason why current quarter spikes.

We should see a drop in tariff by next quarter starting January if the oil price remains low this quarter.(pray)

The worst case scenario is liberalization of electricity market that made the electricity tariff to change every 1/2 hour...yes every 30 min due to not just cost of fuel but also demand and supply.

Any black-out in small part of Singapore due to disruption of any kind will spike up the price on the other part of the island.

Study Enron California Energy Crisis to know what I mean.

I used to work for a power generation company So I know...we are going a very dark future.

Prepare to go solar...if possible.

Anonymous said...

Hi Simon

Isn't the market already liberalized for factories, etc?
(reverse auction thing)

So why is the price tied to oil when it is 80% natural gas/
Its not like Indonesia is the only supplier of natural gas. We are quite pals with the Burmese junta and commies in Vietnam.

Anonymous said...

some materials for use when our beloved minister cow raises the cost of healthcare.

Anonymous said...

hi Lucky

have u seen the video of Neel "cash & carry" on covered bonds(his solution to the crisis)?

Ho Ching would be better equipped to run the bailout.

We are doomed.

Anonymous said...

this is all done for our good, so that no one can "do us in".

If they dont raise the tariffs, how else are they going to raise funds to acquire all the power plants around Asia and beyond? Its such a quick and easy way to raise money.

and then - once we have control over all the power plants in the region, then we have control over our neighbours.

Think about it - we now largest shareholders of the last remaining powerful banks of the world, Singtel owns many of the telcos in the region, and soon, we'll own the power plants too. SIA slowly buying up shares of airlies, and no doubt PSA will start buying ports too. i waiting for the day when Mediacorp/SPH will start competing with Rupert Murdoch or Ted Turner. Our casinos will also be better than the rest of the world - Macau only has F3, we have F1!

Then Singapore will continue on its path of Golden Age. We may be a red dot, but no one is going to mess with this red dot.

i mean - which other country in the world has govt departments taken on the role of fund managers? we read so many stories about town councils, govt depts making investments...even religious organisations.

only in Singapore!

Gila Babi said...

All that I can say is:

KNN CCB!!!!!!!!!!!!

SingTel need to raise prices because copper prices increased? What the fuck! They don't need to build any more infrastructure in Singapore - its all there already- if we don't kmow that we have been sleeping all this time. It was all wired up back in the days when they were the Telecoomunication Authority of Singapore, or even further back!

The only reason the KNN CCB Singapore Power raising their prices is to make themselves look more profitable so that they can be sold off to foreign companies at a BIGGER profit for the PAP govt!

Then they can say GDP gone up so they can justify their next round of ministers' pay hike because they "have been doing well despite the economy in crisis all over the world!"

When the fuck are Singaporeans ever going to wake up!!!! No more nostalgia over what the PAP has done for us, please! NOW the greed and profiteering is JUST TOO BLOODY OBVIOUS!!!

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