Power tariff peg to fuel prices raises question over latest hike

Straits Times Forum
Published on Apr 3, 2012

THE electricity tariff has increased (‘Electricity tariff going up again’; last Saturday) by about 44 per cent from January 2007 ($20.02) to this month ($28.78), against an 80 per cent increase in fuel prices, that is, this month’s price of $136.37 per barrel against January 2007’s $75.73.

As the Energy Market Authority’s website states that the non-fuel cost, which reflects the cost of generating and delivering electricity to homes, has remained largely unchanged over the past few years, why is it that the fuel component of the tariff has increased by about 113 per cent, from about 8 cents in January 2007 to 17 cents this month?

As the electricity tariff is pegged to fuel prices, as we have been told, why did the fuel component increase by about 113 per cent, against an 80 per cent increase in fuel prices?

Also, as the non-fuel cost includes the power generation cost, which covers also the capital costs of the power stations, and several of our power generation companies have been sold to foreign firms, shouldn’t there have been a reduction in the non-fuel component, as the capital costs of the stations may have already been recouped?

Leong Sze Hian

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.