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10 December 2008, TODAY Fuel oil prices are falling, so why are tariffs still high? I REFER to the reduction of the electricity tariff by 25 per cent in January. According to the Energy Market Authority's (EMA's) chart on fuel oil price versus the low tension tariff, the tariff was $22.62 in January this year when fuel oil was $96.64. Since the tariff is pegged to fuel oil, why is the tariff for January next year, at $22.93, higher than that in January this year, when fuel oil is now lower at $92.99 compared to $96.64 in January this year? This means that year-on-year, despite a 4-per-cent fall in fuel oil, the tariff increased by 1 per cent. So, is the tariff pegged to fuel oil or not? The 25-per-cent decrease is relative to October's 21-per-cent increase.Against the tariff of $23.88 in April, the decrease is only 4 per cent, and is still 1 per cent higher than January's $22.62. With all the Utilities-Save (U-Save) rebates to help Singaporeans, why has the number of households in arrears increased from 3,600 in 2006 to 5,090 in October, and the number on the Pay As You Use (PAYU) meter scheme also increased from 12,200 in December 2006 to 13,243? Leong Sze Hian Reply From EMA IN "FUEL oil prices are falling, so why are tariffs still high?" (Dec 10), Mr Leong Sze Hian asked why, despite a 4-per-cent fall in the forward fuel oil price from $96.64 per barrel in January 2008 to $92.99 per barrel in January 2009, the electricity tariff over the same period increased by 1 per cent. The electricity tariff comprises both fuel and non-fuel cost components. While the fuel cost has come down due to the decline in fuel oil price, the non-fuel cost, which includes the operating and capital costs of the power plant, has increased due to inflation. This increase in the non-fuel cost more than offsets the decline in the fuel cost, which explains why the overall tariff in January 2009 is slightly higher than that in January 2008. Mr Leong also highlighted the increase in the number of households in arrears and on the Pay-As-You-Use (PAYU) meter scheme, and questioned the effectiveness of the Utilities Save (U-Save) rebates. In fact, with the recent disbursement of U-Save in November, the number of accounts in arrears has dropped to 3,099, below the level of 4,367 in December 2006. The take-up rate of PAYU meters has also reduced to fewer than 50 new users per month, from 300 to 500 new users each month in 2006. |
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