Electricity tariff fall by 4.2%

I refer to the article “Electricity tariffs to fall by 4.2% for first three months of 2016” (Straits Times, Dec 31).

It states that “Households will pay less for their electricity bills in the first three months of 2016, with tariffs going down by 4.2 per cent.

This is a drop of 0.85 cents per kilowatt hour (KwH) compared to the previous quarter because of the lower cost of natural gas for electricity generation, Singapore Power said in a news release on Thursday (Dec 31).

The cost of natural gas fell by 8.9 per cent compared to the fourth quarter of 2015.”

Gas price fell 60%?

Natural gas prices have dropped by about 60 per cent since its last high in 2014 against a 24 per cent drop in the electricity tariff from the high of $25.73 in April 2014 to $19.50 now.

This may be due in part to the tariff having two components (fuel and non=fuel). In this connection, according to the Energy Market Authority on 28 October 2014 – “Given that fuel costs now constitute more than half of the tariff, a 10 per cent decrease in fuel costs, for example, should result in a tariff reduction of approximately 5 to 5.5 per cent, assuming non-fuel costs remain unchanged”.

179% increase in profits last year?

Notwithstanding the above, perhaps the ultimate measure arguably, may be the bottom line – profits.

Singapore Power’s (the company) profits increased by a whopping 179 per cent from $143.7 million in 2014 to $401.6 million in 2015.

Singapore Power Assets’ profits increased by 57 per cent from $378.6 million in 2014 to $592.7 million in 2015.

Expensive electricity tariff in the world?

According to a study in 2008 – Singapore was ranked second among 21 cities for raising electricity tariffs most, since 2005.

After adjusting for purchasing power parity – are we now amongst the highest electricity tariffs in the world?

Leong Sze Hian