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154th FAQs on 22% Electricity Price Hike!

makapaaa

Alfrescian (Inf)
Asset
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>But silent on the fact that govts all around the world are cutting tariffs to help the people!


Queries on your power bill answered
</TR><!-- headline one : end --><TR>Readers have flooded The Straits Times Forum mailbox with letters about the recent 21 per cent hike in electricity charges. LIAW WY-CIN put some of their questions to the Energy Market Authority and got the following responses. </TR><!-- show image if available --></TBODY></TABLE>




<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->Crude oil prices are coming down and petrol stations are slashing pump prices. So why are electricity prices still going up?
Crude oil and fuel oil are two different products with two different prices.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>Buy electricity? Pick a pricing plan
IN ABOUT three years, buying electricity could become similar to choosing one's cellphone price plan - several plans to choose from, pre-paid cards, accounts to top up and even freebies thrown in.

By then, several rival companies could be in the picture, each vying for a slice of the household electricity pie and striving to come up with competitive pricing and strategies that will benefit the consumer.


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FUEL PRICES AND ELECTRICITY COST
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</TD></TR></TBODY></TABLE>Crude oil, the raw material pumped up from deep underground, is not used to produce electricity.
Instead, companies use fuel oil, which is made from refining crude oil. Electricity prices are therefore pegged to fuel oil prices.
The oil prices usually mentioned in the news refer to crude oil prices. The pump prices at petrol stations are pegged to crude oil, which is why the recent fall in crude oil prices led to cuts in petrol and diesel prices.
But 80 per cent of our electricity is powered by natural gas, so why are electricity prices pegged to oil prices rather than gas prices?
Asia does not have a benchmark for gas prices. Until its gas trading industry comes up with a gas index, electricity prices will be pegged to oil prices.
Fuel oil prices are also coming down, so why are electricity prices still going up?
Since 2004, electricity tariffs here have been pegged to forward fuel prices instead of spot fuel prices.
Spot fuel oil prices are those that apply to oil for immediate delivery to customers.
The forward fuel price is the price for a contract to deliver fuel oil during a future period. These contracts are traded in the commodities market.
Forward fuel oil prices are set in advance to lock in the price of fuel oil so power generation firms have some certainty in pricing electricity. Uncertainty tends to lead to higher prices and volatility in the commodities market.
Changes in the spot fuel oil price will influence the forward fuel oil price. But because our electricity tariff is based on the forward price quoted three months earlier, there is a lag time of about three months before we experience the impact of the change.
For example, between October 2006 and June last year, electricity tariffs fell by 13 per cent, from 21.64 cents per kilowatt-hour (kwh) to 18.88 cents per kwh, after fuel oil prices fell.
Spot fuel oil prices are falling now, so this should translate into lower forward fuel prices three months later, if the decline continues.
Did the recently concluded Formula One race contribute to the electricity price hikes?
No, the F1 organisers brought in their own generators and equipment for the race. The electricity tariff has not been raised to cover the costs of lighting up the F1 circuit.
Why can't electricity be more heavily subsidised? (As if electricity is being subsidized in Peesai! Perform NS and mislead till like this?)
The Singapore Government has a policy of subjecting essentials like electricity, water and oil to market forces as it believes blanket government subsidies are generally unsustainable.
The Malaysian and Indonesian governments, for example, recently found it hard to revoke their heavy fuel subsidies when oil prices rose. Demonstrations and riots broke out.
Here, the prices of essentials are allowed to rise and fall according to market forces. Subsidies are made available to those in financial need.
In about three years, the Government is planning to further liberalise the electricity sector, opening up household power services to other providers. How will that benefit residents? The liberalising of the market for electricity for industrial use has resulted in a 3 per cent to 8 per cent drop in electricity prices.


=> Since when have electricity prices while the Familee's profit has ballooned to $1.6B? LIE also dun bat an eye?
Electricity for household use is now provided only by Singapore Power. Opening up the household electricity sector in about three years could bring in more competing energy providers, driving electricity prices down. The effect could be the same as that of the liberalisation of the mobile phone industry, which lowered the cost of using a mobile phone. Power generation companies might even throw in freebies to entice consumers to sign up with them.
 
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