Confused over U-Save rebates?

Posted by theonlinecitizen on January 3, 2012 

~by: Leong Sze Hian~

I refer to the report “800,000 HDB households to receive S$40m of U-Save rebates” (ChannelNews Asia, Dec 31) and the 2.3 per cent increase in the electricity tariff.

It states that “The U-Save rebates in January are the final tranche of the five years of rebates that were granted as part of the Goods and Services Tax Offset Package beginning in 2007”.

Offset GST?

I am rather confused. Since the U-Save rebates were to offset the GST increase, shouldn’t it not be considered as money which helps Singaporeans to pay electricity bills, which keeps increasing due to electricity tariff increases?

My layman understanding is that if I have to pay more for my cost of living, because of the GST increase, then rebates like U-Save may only help me to cover my overall GST increase. So, how does it really help me to pay for increasing electricity bills?

Another way of looking at it may be that since “The U-Save rebates aim to help households cope with rising costs, including increases in utilities bills due to higher electricity tariff”, how could those who decided on the 5-year U-Save rebate in 2007 know that the electricity tariff would go up so much in the next five years, such that the U-Save rebates were repeatedly over the years  described as “help households … cope with …  increases in utilities bills due to higher electricity tariff”?

I am confused. Were U-Save rebates to offset the GST increase and thus the overall increase in the cost of living, or also to help pay for increasing electricity tariffs in the future, which nobody could have known in 2007?

Declining rebates to offset permanent increase?

The U-Save rebates are also on a declining scale (see HERE). For example, 4-room households as announced in 2007, were to receive $210, $190, $170,  $130 and $90 from 2007 to 2011 (note: an additional $95 was given for 2008 due to the 50% increase in the total amount of U-Save rebates to be given out in Fiscal Year (FY) 2008 ss announced by the Prime Minister on 17 August 2008).

I am confused. Since the GST increase is permanent, why was the U-Save rebate declining on a yearly basis. Also, what happens after 2011? – no more rebates to help offset the GST increase?

What does “It said that on average, taking into account the U-Save rebates, families living in four-room and smaller flats have not seen any increase in annual payments for utilities bills since 2007” mean? – That some paid more and some paid less such that on the average there was no increase? Would it not be better to give the statistics as to how many households paid less, the same or more, and by how much more?

38% increase in electricity tariff?

By the way, the electricity tariff increased from $20.02 from January 2007, to $27.59 in January 2012 (see HERE), which is an increase of 38 per cent.

I am confused. The electricity tariff went up by 38 per cent over the five years, and yet the yearly declining U-Save rebates announced in 2007, supposedly to offset the overall cost of living due to the GST increase, were repeatedly described as “on average, taking into account the U-Save rebates, families living in four-room and smaller flats have not seen any increase in annual payments for utilities bills since 2007”?

Power profits grew 32%?

In this connection, Singapore Power’s revenue grew from $5.2 to $7.8 billion, from FY06/07 to FY10/11 (see HERE), which is an increase of 50 per cent.

For the same period, its Net profit after tax (recurring profit, excluding Exceptional & Non-recurring items) grew from $677 to $893 million, which is an increase of 32 per cent.

More electriifying questions?

When most of Singapore’s power generating companies were sold to foreign companies, was there any debate in Parliament on the sale, as I understand that such assets would typically be deemed as strategic assets in other countries?

What are the profits of the power generating companies?

Why are the sale and purchase of power agreements not made public, as they are deemed to be contracts between private entities?

According to the Energy Market Authority’s web site ( , the non-fuel cost, which reflects the cost of generating and delivering electricity to our homes, comprises the following (4 components):

  1. Power Generation CostThis covers mainly the costs of operating the power stations, such as the manpower and maintenance costs, as well as the capital costs of the stations.
  2. Grid ChargeThis is to recover the cost of transporting electricity through the power grid.
  3. Market Support Services (MSS) FeeThis is to recover the costs of billing and meter reading.
  4. Power System Operation and Market Administration Fees – These fees are to recover the costs of operating the power system and administering the wholesale electricity market

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.