Fuel cost price goes down but tariff goes up!

[Confuseous]

“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”.

So, despite all the measures to reduce the non-fuel cost, the non-fuel cost “increased due to inflation”, such that “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.”

Hence, we have a situation whereby the electricity tariff went up despite a fall in fuel price because the non-fuel cost went up, and now in 2012 the electricity tariff goes up because of higher fuel price with the non-fuel cost remaining constant despite so many measures to reduce it over the years.

- http://theonlinecitizen.com/2012/04/fuel-cost-pric-goes-down-but-tariff-goes-up/

 

[HTOLAS]

And the price of natural gas, which is the main, if not sole, fuel for generating electricity in Singapore and which is not refined from petroleum, is at an all time low!