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28 November 2011, Today From transparency to opacity CONSTRUCTIVE suggestions should be put forward during public debate, such as in Parliament, so that all can solve problems together, government leaders said recently. However, relevant information is sometimes unavailable to the public or is not presented in a consistent format to facilitate analysis. A case in point is the non-fuel generating cost component of the electricity tariff, for which the Energy Market Authority had for years been providing detailed breakdowns of, on its website. But not for this quarter. This part of the tariff is paid to electricity generating companies to cover their non-fuel expenses (such as depreciation, staff costs, etc) and profit and is estimated to cost domestic consumers nearly S$500 billion annually. The cost to non-domestic consumers, who use close to five times as much electricity as domestic consumers, is difficult to estimate. The non-fuel generating cost is not insignificant in dollar terms and has trended upward since the first quarter of 2008, at an annualised rate of approximately 6 per cent. More worrying, it increased in all but one of the eight calendar quarters ended Q3 this year, at which point it was 50 per cent higher than in Q3 2009, or an annualised increase of 22 per cent. For this quarter, using (less detailed) information from SP Services, it is seen that the combined fuel and non-fuel components of the tariff declined 1.4 per cent even as the reference price of fuel declined 2.8 per cent. The non-fuel cost could be estimated to have increased 1.7 per cent (or 6.9 per cent annualised), but the public cannot be certain of this. The EMA did not say, to my previous letter "What about non-fuel cost?" (July 25), how much of the non-fuel cost goes towards the generating companies' profits. Now, I ask the EMA why it went from transparency to opacity. Will SP Services do likewise? Without relevant information, few people can ask the right questions and fewer still can offer meaningful suggestions. David Boey Reply From EMA We provide information in a meaningful, timely manner We thank Mr David Boey for his feedback and letter “From transparency to opacity” (Nov 28). He asked about the provision of information by the Energy Market Authority and the non-fuel generation cost component of electricity tariffs for non-contestable consumers. The EMA agrees that it is useful for the public to understand the energy industry here. This is why the EMA has been providing a wide range of information on our website, including updates on sector developments, consultation papers, as well as areas such as energy statistics, tariffs and industry regulations. The contents and format of our website are reviewed regularly to ensure that they are relevant and informative, and we will continue to review how information can be uploaded in a meaningful, timely manner. This has been the approach that EMA has adopted in liberalising Singapore’s energy market and formulating energy policies. It remains an integral part of our public communication efforts. With regard to non-fuel generating costs, the EMA regulates all components of the tariff to ensure that it is reasonable. As we had explained in reply to Mr Boey’s earlier letter “What about non-fuel cost?” (July 25), the non-fuel component is pegged to the cost of the most efficient generating technology now in our market. We also clarified that the non-fuel generating component comprises various costs, such as operating costs of the generating plants, manpower and capital costs and an adjustment component to account for any variation between forecasted and actual electricity consumption. As these costs vary at different time intervals, changes in non-fuel generating costs should be considered over a longer time period. For example, over the last three years, the non-fuel generating cost has increased by around 3 per cent per annum. This is close to the average inflation rate over the same period. Should Mr Boey have further queries or suggestions, we would be happy to discuss with him. Ms Juliana Chow |
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