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27 October 2008, The Straits Times

Electricity tariff 82% higher here than in Hong Kong

THE recent jump in the electricity tariff has left many wondering what was the rationale. Is the oil price the only culprit? Fuel is not the only component cost of electricity. Buildings and infrastructure, plant and machinery depreciation, maintenance, insurance, manpower, distribution grid and management costs are substantial expenditure in the total production of electricity.

Forum writers have pointed out that Singapore's electricity is more expensive than in the United States and France. Some ask for transparency, while others wish the price to remain, in view of the economic downturn. The authority does not seem willing to help. Should we cut household electricity usage back to 1970s level?

Everyone should save electricity, but there is a limit, unless we curtail our lifestyle to the extreme. More development, population growth and a higher standard of living increase electricity demand. Is it helpful to punish existing consumers who try their best to save?

Let us examine Singapore's 'twin city' of Hong Kong with a similar vibrant lifestyle and standard of living, and try to understand if Singaporeans, for all their hard work, enjoy the same public utility in good times or bad times. Like Singapore, Hong Kong imports all its fuel and pays similar volatile fuel prices. Hong Kong does not enjoy the advantages of piped natural gas. Neither has nuclear power and both operate on the same business model - free market pricing.

I don't know how Hong Kong pegs its electricity tariff, but I am sure power generation companies know the production costs of electricity to work out competitive tariff rates to consumers. Unless Hong Kong gets very cheap oil, there is no reason why its tariff is so much lower.

However, people in Hong Kong pay an electricity tariff at 88 Hong Kong cents (17 Singapore cents) per unit. Why should Singaporeans pay 31 cents per unit - a whopping 82 per cent higher?

Paul Chan

Reply From EMA

IN HIS letter on Monday, 'Electricity Prices: 82% higher here than in Hong Kong', Mr Paul Chan asks why Singapore has a higher electricity tariff than Hong Kong, when both places depend on imported fossil fuels and do not subsidise electricity.

Electricity is more expensive in Singapore because our fuel cost is much higher compared to Hong Kong. In particular, fuel charges account for 19 cents per kilowatt-hour of the overall tariff in Singapore, but just 5 cents per kilowatt-hour in Hong Kong.

Hong Kong enjoys this significant cost advantage in fuel largely because more than half of its electricity is generated from coal-fired power plants. Coal is cheaper than oil and natural gas, but it is also a dirtier fuel. Hence, the price of this heavy reliance on coal is felt in the impact on air pollution and quality of life. Another 10 per cent of Hong Kong's electricity comes from nuclear power plants in China which are unaffected by the high global oil price.

In contrast, Singapore's electricity is generated predominantly using imported natural gas, which is indexed to the fuel oil price by commercial contracts. We also do not have a ready source of low-cost energy supplies from our neighbours.

Any comparison of electricity prices across jurisdictions will have to take into account these variations in fuel mix and supply. In fact, our electricity tariff is lower than or comparable to that of countries such as Ireland and Japan, which, like Singapore, are highly dependent on imported oil and natural gas to meet their electricity needs.

More EMA's replies to letters in the media:

Wholesale Electricity Prices, Tariffs May not Move in Tandem

8 April 2013, Today Voices

Info On Electricity Tariffs Readily Available Online

5 April 2013, The Straits Times

Tariff changes mainly due to fuel price changes

17 May 2012, Today Voices

Cheaper electricity: Energy authority rebuts view

20 April 2012, The ST Forum

Giving households a choice of energy retailers remains a priority

11 April 2012, The Straits Times

Power tariff increases in line with fuel prices

3 April 2012, The Straits Times

We provide information in a meaningful, timely manner

28 November 2011, TODAY

Liberalisation has its benefits

27 September 2011, TODAY

Changes in electricity tariff primarily driven by fuel cost movements

25 July 2011, TODAY

Factors do help cushion tariffs against oil price hikes

10 March 2011, TODAY

Put the brakes on electricity price hikes

31 December 2009, My Paper

Tariff increase might lead to repercussions

9 October 2009

Choice of electricity retailers

1 October 2009

Tariff-calculation formula online

29 December 2008, My Paper

Power tariff formula reviewed every 2 years

17 December 2008, TODAY

Doing the power math
10 December 2008, TODAY

Gencos don't make 'extraordinary profits'
9 December 2008, The Straits Times

Energy bill formula still being tweaked
13 November 2008, TODAY

Why HK pays a different price
30 October 2008, TODAY

Fairer comparisons - Japan and Ireland
27 October 2008, The Straits Times

Tariff Revision no benefit to power generation companies
20 October 2008, TODAY

Lower distribution cost moderated tariff increase
16 October 2008, Lianhe Zaobao

Why electricity price hike was needed
10 October 2008, The Straits Times

Lower Electricity Tariff if Price of Oil Continues to Fall
7 October 2008, My Paper

Price electricity properly and give focused help
7 October 2008, My Paper

Towards a more liberal electric mart
7 October 2008, My Paper

Quarterly tariff update accounts for time lag
2 October 2008, My Paper

Higher electricity prices will not adversely affect lower-income families

1 October 2008, Lianhe Zaobao

EMA explains spike
1 October 2008, The Straits Times