Electricity tariff: Did fuel component increase by 181 percent?

Posted by theonlinecitizen on January 16, 2012

~by: Leong Sze Hian~

I refer to the advertisement notice in the media on the increase in the electricity tariff. The chart (see HERE) shows the increase in fuel prices versus the electricity tariff for the last five years.

Non-fuel component not shown?

As the electricity tariff comprises the fuel and non-fuel components, I would like to suggest that the chart shows the non-fuel component as well.  Otherwise, the chart may give the perception that the electricity tariff only increased by about 38 per cent (January 2012 $27.50 divided by January 2007 $20.02), against a 68 per cent increase in fuel (January 2012 $127.07 divided by January 2007 $75.73).

Since the non-fuel component remains unchanged over the last quarter, the fuel component of $22.53 now accounts for 82 per cent of the tariff (fuel $22.53 divided by tariff $27.50). The 61 cents increase this quarter of the fuel component is a 2.8 per cent increase (January 2012 $22.53 divided by October 2011 $21.92), against the overall 2.3 per cent increase in the tariff.

Fuel increased 68%, but fuel component increased 181%?

Similarly, for the last five years, since the fuel component in 2007 was about 40 per cent of the tariff according to the Energy Market Authority’s website , only about $8.01 of the $20.02 tariff then was due to fuel, with $12.01 to non-fuel.

So, does it mean that the increase for the last five years of the fuel component was about 181 per cent (January 2012 $22.53 divided by January 2007 $8.01), against a 68 per cent increase in the fuel price?

Finally, why has the fuel component as a proportion of the tariff increased from about 40 in 2007 to 82 per cent now?



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About Leong

Leong Sze Hian is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been host of a money radio show, a daily newspaper money column, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, and invited to speak more than 100 times in about 25 countries on 5 continents. He has served as Honorary Consul of Jamaica and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.