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Households should consider fixed-price electricity plans amid fuel price volatility: Tan See Leng

SINGAPORE — Households should consider switching to fixed-price plans offered by electricity retailers under the Open Electricity Market, given that fuel price fluctuations are expected to continue into the months ahead, Second Minister for Trade and Industry Tan See Leng said on Wednesday (Oct 14).

Households should consider fixed-price electricity plans amid fuel price volatility: Tan See Leng

Dr Tan See Leng, Second Minister for Trade and Industry, said that it was in the interest of many to switch to fixed-price electricity plans on the Open Electricity Market.

  • More volatility in fuel prices expected in the months ahead, said Minister Tan See Leng 
  • This will cause fluctuations in electricity costs
  • From April to July, households’ average monthly electricity consumption rose 16 per cent as more people stayed home
  • A suggestion by a Non-Constituency MP that a recent tariff hike was opportunistic drew sharp responses from the Government 

 

SINGAPORE — Households should consider switching to fixed-price plans offered by electricity retailers under the Open Electricity Market, given that fuel price fluctuations are expected to continue into the months ahead, Second Minister for Trade and Industry Tan See Leng said on Wednesday (Oct 14).

Electricity tariffs generally move in tandem with global fuel prices, which rebounded 46.6 per cent in the third quarter from a 20-year low in April as global economic activity resumes gradually.

Utilities firm SP Group said late last month that electricity tariffs will increase by 9.3 per cent from October to December. This means that the average monthly electricity bill for families living in four-room public housing flats will go up by about S$7. 

But Dr Tan, who is also a Minister in the Prime Minister’s Office, reiterated that about 47 per cent of households will not be affected by the hike, as they have already switched to the Open Electricity Market. 

“So it is actually in the interest of many people to switch,” he said.

The Open Electricity Market was rolled out between 2018 and last year to allow consumers to buy electricity from different retailers and therefore benefit from competitive prices and innovative offers.  

Fixed-price plans from these electricity retailers offer a flat rate per kilowatt hour of electricity used for the duration of a contract. SP Group, by comparison, charges a tariff that may change every quarter based on market conditions.

Dr Tan was responding to a question from Bukit Panjang Member of Parliament (MP) Liang Eng Hwa about the reasons for the latest increase in electricity tariffs and gas prices. Mr Liang also asked whether electricity and gas consumption had risen as more residents work from home, and whether increased development in other sources of energy has reduced the overall cost of electricity.

Retailer City Gas also said earlier that gas prices for the last quarter will go up by about 5 per cent owing to higher fuel prices.

Yet Dr Tan noted that despite the increases, electricity and gas tariffs for the second half of the year are still among the lowest since January 2018.

In particular, he said that electricity tariffs in the fourth quarter of this year are still 11.6 per cent lower than in the first quarter, and 6.7 per cent lower than the average tariffs between January 2018 and September this year.

Moving forward, electricity tariffs will continue to hinge heavily on fuel prices. 

“Alternative energy sources today constitute a very small proportion of Singapore's power generation because of our natural geographical limitations,” Dr Tan said. 

The Government aims to raise solar capacity five-fold to make up around 3 per cent of Singapore's energy consumption by 2030.

HIGHER CONSUMPTION

As more people stayed home to stem the spread of Covid-19, the average monthly electricity and gas consumption by households has climbed. 

From April to July, average monthly electricity consumption rose by 16 per cent, while gas consumption went up by 34 per cent, compared with the same period last year.

The Government has taken more steps to help Singaporeans with their utility bills this year.

Households in one-room and two-room government-built flats will, on average, receive help equivalent to at least six to eight months of their utility bills. Those living in three-room and four-room flats will receive support equivalent to at least two to four months of their utility bills.

TARIFF HIKE ‘NOT OPPORTUNISTIC’

In a debate in Parliament on Wednesday, Non-Constituency MP Leong Mun Wai brought up the electricity-tariff hike and the Government’s financial support as an example of it “giving with one hand and taking with the other”. 

Mr Leong, who is from the opposition Progress Singapore Party, said that SP Group could have easily absorbed the higher prices from the power-generation companies using its past profits, instead of passing them on to Singaporeans already struggling in the economic downturn.

Dr Tan explained that SP Group does not benefit from tariff increases directly.

SP Group, as the distributor, charges consumers the same energy costs that it pays to buy power from the power-generation companies, said Dr Tan, who stressed that the tariff hike was not “opportunistic”.

“And I have said it, many a time, that the generation companies, too, need to have some form of returns, because they have also invested significantly in the infrastructure here,” he added.

Generation companies operating in Singapore include Tuas Power Generation, Senoko Energy and YTL PowerSeraya.

Wading into the debate, Mr Chee Hong Tat, Senior Minister of State for Foreign Affairs and Transport, also pointed out that SP Group’s returns are regulated by the Energy Market Authority.

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electricity tariff Tan See Leng fuel price household

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