June 30, 2022

S’pore electricity tariffs to rise by about 8% for Q3 amid global oil, gas crunch

By brit

SINGAPORE – About half the households in Singapore will pay higher electricity bills for the next three months, with the electricity tariff for the next quarter going up by about 8 per cent compared with the previous quarter.

The electricity tariff for the period July 1 to Sept 30 will be 30.17 cents per kilowatt-hour (kWh), excluding the goods and services tax (GST), said grid operator SP Group on Thursday (June 30).

This is up from the current rate of 27.94 cents per kWh. The electricity tariff has been rising since April last year.

Regulator Energy Market Authority (EMA) told The Straits Times the tariff increase would only apply to half of all residential consumers. 

“Consumers on fixed price plans with retailers will not see any price increases until such time when they renew their contracts, where they are likely to see higher prices,” said its spokesman. 

Meanwhile, producer and retailer of piped town gas City Energy also announced on Thursday that the gas tariff for households will go up from 21.66 cents per kWh before GST, to 23.09 cents per kWh. The 1.43-cent increase is equivalent to a price hike of 6.6 per cent, and will be in effect from July 1 to Sept 30.

Both SP Group and City Energy attributed the price increments to higher fuel costs. 

SP Group said the higher energy costs were driven by rising global gas and oil prices exacerbated by the conflict in Ukraine.

The grid operator noted that households living in a four-room Housing Board flat – which typically consumes about 349 kWh of electricity a month – can expect their average monthly electricity bill to go up by $8.25 excluding GST.

Electricity prices have increased worldwide as gas prices hit record levels due to a myriad of factors, including the unanticipated demand for gas from pandemic-recovery, severe weather events and reductions in the global gas supply.

While demand was expected to ease as the winter demand cooled off, market fundamentals have been severely exacerbated by the rippling effects of Russia’s invasion of Ukraine on Feb 24.

The war, which is entering its fifth month, has resulted in wide ranging sanctions against Russia’s energy exports, which includes crude oil, diesel and piped gas. This has forced countries in Europe to scour the world for alternatives, putting them in direct and sometimes fierce competition with the rest of the world, including Singapore.

The Republic depends on imported gas for about 95 per cent of its electricity needs and is vulnerable to any shifts in supply-demand fundamentals globally.

The electricity tariff in Singapore is calculated from four components.

Fuel costs, which reflect the cost of imported natural gas and tracks the price of oil, make up about half of the tariff. 

On Thursday, benchmark Brent crude oil prices were trading close to US$116 a barrel, while around the same time last year markets were dealing around US$75 to US$76 a barrel. This represents a rise of around 52 percent over a period of 12 months, clearly reflecting the sheer scale by which prices have structurally shifted. 

The rest of the tariff covers other costs related to activities such as maintenance of power plants, meter-reading and transporting electricity through the grid.