Electricity tariffs to decrease in first quarter next year

[CityFarmer]

The energy cost in Singapore is going down...

Electricity tariffs to decrease in first quarter next year

SINGAPORE — Electricity tariffs will decrease by an average of 8 per cent, or 1.99 cents per kWh for the period of 1 January to 31 March 2015, as compared to the previous quarter.

The electricity tariff for households will decrease from 25.28 to 23.29 cents per kWh, meaning the average monthly electricity bill for families living in four-room HDB flats will decrease by S$7.93.

SP Services explained that the tariff reduction is due to lower cost of fuel for electricity generation, which fell by 16.4 per cent in the previous quarter. They said that fuel cost makes up approximately 50 per cent of the tariff, which translates to a proportional reduction of 8 per cent in the first quarter (Q1) of 2015 electricity tariff.

SP Services reviews the electricity tariffs quarterly based on guidelines set by the Energy Market Authority (EMA), the electricity industry regulator. The tariffs for Q1 2015 have been approved by EMA.
http://www.todayonline.com/singapore/ele...-next-year

[brattzz]

fuel cost = 50% of tariff = 8% in 1st Q of 2015.

ok so what's the other 50% of the tariff? the distribution cost?

[CityFarmer]

fuel cost = 50% of tariff = 8% in 1st Q of 2015.

ok so what's the other 50% of the tariff? the distribution cost?

Base on the Singapore Power info, other costs are
- Network Costs
- MSS fee
- Market Admin and PSO fee

http://www.singaporepower.com.sg/irj/por...=undefined

[brattzz]

err.. means something wrong with the report & the online bar chart?

1) Fuel Cost = 50% = 18.02cts/kwh, should be 77.3%!!
2) Network Cost = 5.05cts/kwh
3) MSS Fee = 0.17cts/kwh
4) MarketAdmin/PSO = 0.05cts/kwh

Total cost : 23.29cts/kwh

So total of 2+3+4 = 5.27cts/kwh only = 22.6%!

[CityFarmer]

err.. means something wrong with the report & the online bar chart?

1) Fuel Cost = 50% = 18.02cts/kwh, should be 77.3%!!
2) Network Cost = 5.05cts/kwh
3) MSS Fee = 0.17cts/kwh
4) MarketAdmin/PSO = 0.05cts/kwh

Total cost : 23.29cts/kwh

So total of 2+3+4 = 5.27cts/kwh only = 22.6%!

I guess energy cost is a superset of fuel cost. There may be other sources of energy. Of course, I wouldn't rule out the possibility of mistake, but it should be unlikely since the news release was directly from SP Service.

[brattzz]

which comes back to "Energy Cost" breakdown...

since fuel cost is only 50% of "Energy Cost", so what's are the remaining 50% factors? To Power Generation Companies?

The Bar Chart is way-off in terms of percentage!

[investor101]

The actual formula to calculate our tariffs is a secret, just like the real cost of building HDB flats.

In recent years, we have sold off a lot of our electrical utilities for huge sums of money. Those companies need to turn a profit on their investment. As such, even if oil prices go down by a lot, don't expect your electrical bill to fall by a similar trend. It is just not going to happen period.

My guess is that most GLCs and companies operating monopolies have a threshold ROE or profit margin. They will not lower prices below this margin, regardless the movement in commodities pricing. This is Singapore. As much as possible, all organizations, including public services, run at a profit.

[specuvestor]

^^ This is sadly true since the days of Singapore Inc when public services were told to be profitable.

But changes are afoot and I think people are starting to see that this ideology sounds good but makes no sense in the longer term for our competitiveness.

[HitandRun]

Basically, the 3 main parts of the electricity market in Singapore are (i) power generation (ii) power transmission and (iii) market support services.

Power generation is a competitive process whereby each power plant will bid for prices on a half-hourly basis (if my memory is correct). On the other hand, power transmission is monopolised by SP PowerGrid which is also referred to as network services. Market support services is provided by SP Services (for the retail market only. it is a bit more complicated for contestable customers).

In the picture linked by CF, the energy costs (which is probably a misnomer) refer to what is paid to the power generation companies. Obviously, the power generation companies cannot just have fuel costs alone. One should assume that they should have depreciation for the power plant, manpower costs, etc.

For folks who are interested in the background of the liberalisation of electricity markets in Singapore, you may refer to the following slides:
liberalized-electricity-markets-a-case-study-of-singapore

[egghead]

For folks who are interested in the background of the liberalisation of electricity markets in Singapore, you may refer to the following slides:
liberalized-electricity-markets-a-case-study-of-singapore

Very valuable sharing here. Thanks!