July 1, 2022
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 said the average monthly electricity bill for families living in a HDB four-room flat will increase by $8.25 excluding GST to $111.63.
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.
Rystad Energy, an independent energy research and business intelligence company, said the outlook for Asia and Singapore will be tough especially as European nations compete for alternative supplies.
“Unfortunately this means Asia will need to cede LNG (liquefied natural gas) to Europe during this time and the focus in the region will turn towards more burning of coal and or fuel oil wherever possible,” it said.
“Singapore’s dependence on gas also means it is more exposed to this market than most other Asian countries, though economically we are still in a position to compete for marginal supplies.”
In a media briefing in Singapore on Wednesday evening, global energy giant Shell’s chief executive Ben van Beurden said LNG will continue to remain expensive, and the reality was that spot buyers would face stiff competition.
Last week, the Government announced that it would be providing a $100 utilities credit to every Singaporean household as part of a $1.5 billion support package to help lower-income families and vulnerable groups amid rising global inflation.
The EMA had also previously noted that the Household Support Package introduced as part of Budget 2022 will give eligible households double the quantum of their quarterly U-Save vouchers this year, which will help defray the costs of higher electricity bills.