SINGAPORE: Households renewing their electricity contracts are already facing higher prices, with retailer plans up by as much as 11 per cent almost three weeks into the US-Israel war on Iran.
Fixed-price retail plans for residences ranged from 24.88 to 28.67 cents per kWh on Feb 27 – a day before the war began.
By Friday (Mar 20), prices had increased to between 28.8 and 29.18 cents per kWh, data from the Open Electricity Market’s price comparison website showed.
This represents an increase of between 1.2 and 11.3 per cent, depending on the plan and retailer.
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At the highest end, Senoko Energy Supply and PacificLight Energy’s 24-month fixed price plans rose from 25.88 cents to 28.80 cents per kWh – an 11.3 per cent increase.
For a four-room HDB flat consuming the average 357 kWh of electricity per month, this translates to a S$10.42 (US$8.13) increase in electricity bills. These prices are inclusive of goods and services tax (GST).
But customers could receive more promotional gifts under Senoko Energy’s plan, with the retailer offering up to S$240 promotional gifts and rebates, compared with up to S$160 bill rebates previously.
Both Geneco and Keppel Electric’s 24-month fixed price plan increased by 4 per cent, from 27.68 cents per kWh before the war to 28.80 cents per kWh on Friday. This translates to a S$4 increase in electricity bills for an average four-room HDB flat.
Customers under the Keppel Electric plan could get up to S$100 bill rebate, while those under Geneco could get up to a S$165 rebate – slightly lower compared with the maximum S$195 rebate offered prior to the war.
Other retailers appeared to have also lowered bill rebates and withdrawn certain plans, including discounts off the regulated tariffs – the government-regulated electricity rate reviewed every quarter.
For example, Tuas Power Supply’s 10 per cent off regulated tariff plan and six-month fixed-price plans were no longer available on Friday.
Tuas Power Supply told CNA on Mar 16 that its new offers are adjusted in accordance with market fuel costs. Additionally, it offers bill rebates for some plans on a “while quantities last” basis.
“As our promotional offers may be revised periodically to reflect movements in market fuel cost, it is best for customers to check our website or Facebook page for updated details,” a spokesperson said.
A spokesperson from Geneco said on Mar 13 that it is closely monitoring global developments and working with the Energy Market Authority and industry partners to navigate potential market volatility.
“Our priority is to ensure that both our commercial and residential customers continue to have access to reliable electricity options while safeguarding the long-term sustainability of our business,” the spokesperson said.
As of October last year, 36.57 per cent of residential accounts were on retail price plans, according to the latest data from the Open Electricity Market.
The data also showed that Geneco had the highest residential market share (29.6 per cent), followed by Tuas Power Supply (23.9 per cent) and Keppel Electric (21.5 per cent). Senoko Energy and Sembcorp Power were fourth and fifth, respectively.
Asked what safeguards EMA provides to protect consumers in the Open Electricity Market, the authority directed CNA to its website, which said all retailers are required to conduct fair marketing and contracting practices under the Code of Conduct for Retail Electricity Licensees.
According to the website, EMA will be enhancing the regulatory framework for retailers to ensure they are sufficiently resilient against market volatility.
There are also consumer protection measures in place if retailers were to initiate early termination of contract or were to exit the market, EMA said.
CNA has contacted Sembcorp Power, Keppel Electricity and Senoko Energy for comment.
The Energy Market Authority rolled out the Open Electricity Market (OEM) in 2018 in a move to liberalise the electricity retail market.
Instead of buying electricity from national grid operator SP Group at a regulated tariff, consumers could choose to buy electricity from retailers of their choice.
Another option is to purchase directly from the wholesale market, where prices fluctuate every 30 minutes depending on demand and supply.
Retailers in the OEM are either the retail arm of power generators or independent retailers that buy electricity in bulk from the wholesale market.
As such, conditions in the wholesale market play a key role in determining the business strategies of the latter group of retailers. The ability to hedge against fluctuations is another important factor.
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Electricity retailers could be taking precautionary measures amid an uncertain global climate, analysts said.
The primary cost driver of electricity prices in Singapore is fuel and power generation, which account for over 75 per cent of the electricity tariff, noted Mr David Chew, a senior consultant at Rystad Energy.
The fuel cost component of the tariff rate is calculated using the average of daily natural gas prices in the first two-and-a-half-month period preceding the quarter, according to EMA.
In terms of Singapore’s power mix, around 95 per cent of electricity is generated from natural gas, either piped from neighbouring countries or imported as liquefied natural gas (LNG).
The conflict in the Middle East persists with no clear resolution. While there are mitigating measures in place, such as fuel stockpiles, there will still be some exposure to rising fuel costs, which will ultimately feed through into electricity prices, Mr Chew added.
“The impact on global oil and gas flows is unprecedented, and there is no established playbook for retailers to follow. As a result, decision-making is increasingly forward-looking, with retailers needing to factor in downside scenarios and prepare for further deterioration.
“This precautionary approach is driving quicker adjustments, ensuring they remain resilient if conditions worsen,” he said.
Dr David Broadstock, a partner at energy consultancy The Lantau Group, said that electricity retailers are unlikely to be trying for a profit grab.
Instead, retailers are likely cushioning against the increase in costs.
“No company wants to naturally increase their price by a large quantity because it's just discouraging for customers. And that tells you it's strategically important for them to do so,” he said.
For example, a 10 per cent increase in a two-year fixed-price contract indicates that the company believes it is going to cost about 10 per cent more on average, over those two years, in order to provide the electricity, he said.
On the removal of discounts from tariffs, Dr Broadstock said the increased cost uncertainty could make such contracts riskier.
The increase ahead of the next tariff adjustment in April is notable.
Experts previously said it typically takes three to four months for global energy price increases to be reflected in electricity prices, in line with the regulated tariff adjustment every quarter.
Retailers typically benchmark their rates against the tariff rate, charging just below it to attract customers, Dr Broadstock said.
“And so in normal times, when the market is just murmuring along, it's not very obvious whether the tariff is going to go up a couple of percentage points or down a couple of percentage points. So retailers just don't make many changes,” he said, adding that any changes are relatively small.
The current rates available are almost on par with the tariff rate of 29.11 cents/kWh, including GST.
The quicker response is similar to conditions in 2022, where retailers responded to spot market conditions, Dr Broadstock said.
At the time, fossil fuel shortages triggered by Russia's invasion of Ukraine sent electricity prices surging. A year before, six electricity retailers had exited the Singapore market within weeks amid global energy price spikes.
“What we are observing is that the retailers are confident they don't need to wait to see what the tariff is going to do,” he said, noting that retailers have flexibility, unlike the regulated tariff.
The government has said electricity prices are expected to go up. On Mar 4, EMA warned that some consumers may see an increase in electricity prices at the point of retail contract renewal.
If fuel costs remain elevated, there would be higher regulated tariffs in subsequent quarters, EMA said then.
Prime Minister Lawrence Wong said on Thursday that the government is ready to roll out more measures if energy prices continue to rise.
"A prolonged blockage of the (Strait of Hormuz) will have significant implications for the global economy, and may tip the global economy into a tailspin, into a downturn or even a recession," he said.
In a recent Deep Dive podcast episode on CNA, Minister-in-charge of Energy and Science and Technology Tan See Leng noted that the government's ability to control electricity costs is limited.
However, he said the government will “mitigate sharp spikes” and is prepared to act if conditions worsen.
Singapore also holds stockpiles of liquefied natural gas (LNG) and diesel sufficient to last for months, he said then.
For most households that are still on existing fixed-price retail contracts or on the regulated tariff, price adjustments may not be felt immediately – but would come eventually.
In the meantime, Dr Broadstock said households looking to renew their contracts should carefully review available options.
As companies are increasing prices to manage costs, the approach of choosing between contracts goes beyond price increases; consumers should also consider whether a company may risk going out of business under a given pricing strategy.
“It's not very fair for households to expect that there will be no change to electricity prices. Nobody wants it. But it's pretty obvious that that's inevitable,” he said.
Amid price uncertainty, one retailer, Geneco, has already observed an increase in customers signing up for fixed-price plans.
“With volatile energy and oil markets, many consumers are seeking greater certainty in their electricity expenses. Fixed-price plans provide peace of mind by allowing households to lock in a stable electricity rate and better manage their monthly bills,” the spokesperson said.
The market remains dynamic. On Thursday, Iran’s strikes caused extensive damage at Qatar’s Ras Laffan gas complex – the world’s largest LNG hub – prompting concerns that electricity prices could increase further.
“We're not at a point where the pathway of this begins to be visible,” said Dr Broadstock. “So it's deep uncertainty, not just uncertainty.”
Continue reading...
Fixed-price retail plans for residences ranged from 24.88 to 28.67 cents per kWh on Feb 27 – a day before the war began.
By Friday (Mar 20), prices had increased to between 28.8 and 29.18 cents per kWh, data from the Open Electricity Market’s price comparison website showed.
This represents an increase of between 1.2 and 11.3 per cent, depending on the plan and retailer.
CNA Games
Show More Show Less
At the highest end, Senoko Energy Supply and PacificLight Energy’s 24-month fixed price plans rose from 25.88 cents to 28.80 cents per kWh – an 11.3 per cent increase.
For a four-room HDB flat consuming the average 357 kWh of electricity per month, this translates to a S$10.42 (US$8.13) increase in electricity bills. These prices are inclusive of goods and services tax (GST).
But customers could receive more promotional gifts under Senoko Energy’s plan, with the retailer offering up to S$240 promotional gifts and rebates, compared with up to S$160 bill rebates previously.
Both Geneco and Keppel Electric’s 24-month fixed price plan increased by 4 per cent, from 27.68 cents per kWh before the war to 28.80 cents per kWh on Friday. This translates to a S$4 increase in electricity bills for an average four-room HDB flat.
Customers under the Keppel Electric plan could get up to S$100 bill rebate, while those under Geneco could get up to a S$165 rebate – slightly lower compared with the maximum S$195 rebate offered prior to the war.
Other retailers appeared to have also lowered bill rebates and withdrawn certain plans, including discounts off the regulated tariffs – the government-regulated electricity rate reviewed every quarter.
For example, Tuas Power Supply’s 10 per cent off regulated tariff plan and six-month fixed-price plans were no longer available on Friday.
Tuas Power Supply told CNA on Mar 16 that its new offers are adjusted in accordance with market fuel costs. Additionally, it offers bill rebates for some plans on a “while quantities last” basis.
“As our promotional offers may be revised periodically to reflect movements in market fuel cost, it is best for customers to check our website or Facebook page for updated details,” a spokesperson said.
A spokesperson from Geneco said on Mar 13 that it is closely monitoring global developments and working with the Energy Market Authority and industry partners to navigate potential market volatility.
“Our priority is to ensure that both our commercial and residential customers continue to have access to reliable electricity options while safeguarding the long-term sustainability of our business,” the spokesperson said.
As of October last year, 36.57 per cent of residential accounts were on retail price plans, according to the latest data from the Open Electricity Market.
The data also showed that Geneco had the highest residential market share (29.6 per cent), followed by Tuas Power Supply (23.9 per cent) and Keppel Electric (21.5 per cent). Senoko Energy and Sembcorp Power were fourth and fifth, respectively.
Asked what safeguards EMA provides to protect consumers in the Open Electricity Market, the authority directed CNA to its website, which said all retailers are required to conduct fair marketing and contracting practices under the Code of Conduct for Retail Electricity Licensees.
According to the website, EMA will be enhancing the regulatory framework for retailers to ensure they are sufficiently resilient against market volatility.
There are also consumer protection measures in place if retailers were to initiate early termination of contract or were to exit the market, EMA said.
CNA has contacted Sembcorp Power, Keppel Electricity and Senoko Energy for comment.
How the Open Electricity Market works
The Energy Market Authority rolled out the Open Electricity Market (OEM) in 2018 in a move to liberalise the electricity retail market.
Instead of buying electricity from national grid operator SP Group at a regulated tariff, consumers could choose to buy electricity from retailers of their choice.
Another option is to purchase directly from the wholesale market, where prices fluctuate every 30 minutes depending on demand and supply.
Retailers in the OEM are either the retail arm of power generators or independent retailers that buy electricity in bulk from the wholesale market.
As such, conditions in the wholesale market play a key role in determining the business strategies of the latter group of retailers. The ability to hedge against fluctuations is another important factor.
Collapse Expand
“NO ESTABLISHED PLAYBOOK”
Electricity retailers could be taking precautionary measures amid an uncertain global climate, analysts said.
The primary cost driver of electricity prices in Singapore is fuel and power generation, which account for over 75 per cent of the electricity tariff, noted Mr David Chew, a senior consultant at Rystad Energy.
The fuel cost component of the tariff rate is calculated using the average of daily natural gas prices in the first two-and-a-half-month period preceding the quarter, according to EMA.
In terms of Singapore’s power mix, around 95 per cent of electricity is generated from natural gas, either piped from neighbouring countries or imported as liquefied natural gas (LNG).
The conflict in the Middle East persists with no clear resolution. While there are mitigating measures in place, such as fuel stockpiles, there will still be some exposure to rising fuel costs, which will ultimately feed through into electricity prices, Mr Chew added.
“The impact on global oil and gas flows is unprecedented, and there is no established playbook for retailers to follow. As a result, decision-making is increasingly forward-looking, with retailers needing to factor in downside scenarios and prepare for further deterioration.
“This precautionary approach is driving quicker adjustments, ensuring they remain resilient if conditions worsen,” he said.
Dr David Broadstock, a partner at energy consultancy The Lantau Group, said that electricity retailers are unlikely to be trying for a profit grab.
Instead, retailers are likely cushioning against the increase in costs.
“No company wants to naturally increase their price by a large quantity because it's just discouraging for customers. And that tells you it's strategically important for them to do so,” he said.
For example, a 10 per cent increase in a two-year fixed-price contract indicates that the company believes it is going to cost about 10 per cent more on average, over those two years, in order to provide the electricity, he said.
On the removal of discounts from tariffs, Dr Broadstock said the increased cost uncertainty could make such contracts riskier.
The increase ahead of the next tariff adjustment in April is notable.
Experts previously said it typically takes three to four months for global energy price increases to be reflected in electricity prices, in line with the regulated tariff adjustment every quarter.
Retailers typically benchmark their rates against the tariff rate, charging just below it to attract customers, Dr Broadstock said.
“And so in normal times, when the market is just murmuring along, it's not very obvious whether the tariff is going to go up a couple of percentage points or down a couple of percentage points. So retailers just don't make many changes,” he said, adding that any changes are relatively small.
The current rates available are almost on par with the tariff rate of 29.11 cents/kWh, including GST.
The quicker response is similar to conditions in 2022, where retailers responded to spot market conditions, Dr Broadstock said.
At the time, fossil fuel shortages triggered by Russia's invasion of Ukraine sent electricity prices surging. A year before, six electricity retailers had exited the Singapore market within weeks amid global energy price spikes.
“What we are observing is that the retailers are confident they don't need to wait to see what the tariff is going to do,” he said, noting that retailers have flexibility, unlike the regulated tariff.
The government has said electricity prices are expected to go up. On Mar 4, EMA warned that some consumers may see an increase in electricity prices at the point of retail contract renewal.
If fuel costs remain elevated, there would be higher regulated tariffs in subsequent quarters, EMA said then.
Related:
WHAT’S NEXT FOR HOUSEHOLDS
Prime Minister Lawrence Wong said on Thursday that the government is ready to roll out more measures if energy prices continue to rise.
"A prolonged blockage of the (Strait of Hormuz) will have significant implications for the global economy, and may tip the global economy into a tailspin, into a downturn or even a recession," he said.
In a recent Deep Dive podcast episode on CNA, Minister-in-charge of Energy and Science and Technology Tan See Leng noted that the government's ability to control electricity costs is limited.
However, he said the government will “mitigate sharp spikes” and is prepared to act if conditions worsen.
Singapore also holds stockpiles of liquefied natural gas (LNG) and diesel sufficient to last for months, he said then.
For most households that are still on existing fixed-price retail contracts or on the regulated tariff, price adjustments may not be felt immediately – but would come eventually.
In the meantime, Dr Broadstock said households looking to renew their contracts should carefully review available options.
As companies are increasing prices to manage costs, the approach of choosing between contracts goes beyond price increases; consumers should also consider whether a company may risk going out of business under a given pricing strategy.
“It's not very fair for households to expect that there will be no change to electricity prices. Nobody wants it. But it's pretty obvious that that's inevitable,” he said.
Amid price uncertainty, one retailer, Geneco, has already observed an increase in customers signing up for fixed-price plans.
“With volatile energy and oil markets, many consumers are seeking greater certainty in their electricity expenses. Fixed-price plans provide peace of mind by allowing households to lock in a stable electricity rate and better manage their monthly bills,” the spokesperson said.
The market remains dynamic. On Thursday, Iran’s strikes caused extensive damage at Qatar’s Ras Laffan gas complex – the world’s largest LNG hub – prompting concerns that electricity prices could increase further.
“We're not at a point where the pathway of this begins to be visible,” said Dr Broadstock. “So it's deep uncertainty, not just uncertainty.”
Continue reading...