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Why Singapore Power Dropped Prices by Only 1.6 Percent when Fuel Prices Supposedly Fell by 15%

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JULIANA CHOW: The electricity tariff consists of two main components: The fuel cost and the non-fuel cost components.

The latter includes capital and operating costs of generation companies and grid charges; the former refers to the cost of natural gas, the dominant fuel source for power generation here.

In Singapore and other Asian countries, the cost of natural gas is linked to oil prices. Based on the published methodology, this quarter’s fuel cost component is taken from the average daily gas prices from July 1 to Sept 15, converted from US dollars to Singapore dollars.

It is not correct to compare only two data points using spot crude oil prices at the start of the period and at the end.

As fuel price movements have fluctuated between July 1 and Sept 15, the overall reduction in average daily gas prices is about 3 per cent, not the 15 percent figure used by TODAY reader Mr Narayanan Narayana in his calculations.

This, in turn, translates into a proportional reduction of 1.6 per cent, since fuel costs make up about 50 percent of the tariff.

 

This article was written by Energy Market Authority Director of Corporate Communications, Juliana Chow.

 

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