Electricity to cOst mOre

Teo Xuanwei and S Mustafa

xuanwei@mediacorp.com.sg

SINGAPOR E

She only flicks the switches on at night — for about four hours — to operate a small standing fan and the lights in the living room when she watches the television.

Their daily consumption habits have stayed constant, yet their utilities bill has grown by over 20 per cent since the start of the year, said the 51-year-old tea lady. “From paying around $90, my bill was nearly $120 last month. I was shocked because the use of our appliances have remained the same,” she said.

Mdm Lim’s experience will resonate with many households who are set to face a fifth straight quarter of higher electricity prices, starting today.

From July 1 to Sept 30, electricity will cost 2.42 per cent more, electricity retailer SP Services announced yesterday.

Each kilowatt hour (kWh) will cost 0.57 cents more, at 24.13 cents per kWh — about 25 per cent more than a year ago. Including the Goods and Services Tax, the new rate is 25.82 cents per kWh. On average, families in four-room HDB flats can expect to pay about $2.33 more per month.

Average fuel oil prices over the last three months have remained stable at about $102 per barrel, according to SP Services, a subsidiary of the Singapore Power Group. But higher capital and operating costs of power generation — which cover manpower and maintenance costs of operating power stations — led to the price hike.

The Energy Market Authority (EMA), a regulatory body which seeks to promote effective competition in the energy market, told MediaCorp that capital and operating costs used in the tariff formula are reviewed every two years.

Between these biennial reviews, the cost components are adjusted every quarter to take inflation into account. “It is this inflationary component that has contributed to the tariff increase in the third quarter,” the EMA statement said.

The higher rates also include an adjustment for under- collection in the previous quarter. As tariffs are set in advanced based on forecasted consumption, adjustments have to be made in the subsequent quarter against the actual electricity billings to reflect the actual cost of electricity.

In most quarters, these adjustments are too small to be highlighted, because they are overwhelmed by the fuel oil price changes which are usually much larger. But with fuel oil prices remaining stable this quarter, EMA said the adjustment factor was highlighted accordingly.

Analysts told MediaCorp the tariff hike is expected to have the greatest impact on lower-income families because they are less likely to enjoy any wage increases despite the buoyant hiring market.

And with inflation forecast to hover around the 3 per cent mark, these families “will feel the pinch the most”, said DBS economist Irvin Seah.

Said CIMB-GK economist Song Seng Wun: “Professionals or workers with skills that are in demand are more likely to command better wages ... Their higher salaries will probably offset the higher electricity prices.”— During the day, her four-room flat is empty as Mdm Lim P G, her husband and children are out at work.

When it hit $1.50 down the road, the 'sai' will turn to gold!

When it hit $1.50 down the road, the 'sai' will turn to gold!