Residential Tariffs in Singapore and the Open Electricity Market

Before the introduction of the Open Electricity Market (OEM), households and businesses in Singapore had only SP Group to buy electricity from at a quarterly-revised tariff.

Now, Singaporeans residing in areas where the OEM has rolled out to can purchase electricity from a list of 13 retailers – charged at different rates from the prevailing tariff.

How are Residential Tariffs Determined?

Residential electricity tariffs are set by the SP Group and are regulated by the Energy Market Authority. The prices are set so as to reflect the actual cost of electricity. The tariff comprises of two elements:

1. Fuel Cost: This element of tariffs is equivalent to the average cost of natural gas in the previous quarter. For example, the tariffs for the months of April-June will be determined by the average natural gas prices in the months of January-March.

2. Non-fuel Cost: This is composed of various costs which are involved in the generation and delivery of electricity to the consumers’ homes. These costs are – power generation cost, power grid charge, power system operation fees and fees for market support services like billing and meter reading.

The regulated tariff for the present quarter is 22.79 cents/kWh, exclusive of GST.

How Can Consumers Get Electricity at Lower Prices Than the Regulated Tariff?

At present, retailers offer a variety of standard and non-standard plans. The 2 kinds of standard plans being offered by the retailers are:

1. Fixed Price Plan: Consumers are required to pay a fixed price throughout the entire duration of the contract , disregarding the fluctuations in regulated tariffs.

2. Discount-Off-the-Regulated-Tariff Plan: Consumers are entitled to a fixed discount on the existing regulated tariffs at that time. Consequently, the consumer will always pay lower than the regulated tariffs.

While the former is best suited for those consumers who prefer to pay a fixed price for electricity irrespective of its deviation from the regulated tariffs, the latter is suitable for those customers who do not mind quarterly fluctuating electricity prices as long as they remain below the regulated tariffs.

Understanding Standard Price Plans as a Means of Savings on Electricity Bill

Take the example of this quarter’s current tariff of 22.79 cents/kWh and a 4-room HDB flat with a monthly electricity consumption of 350 kWh. Now, consider a fixed price plan where consumers are required to pay 17.78 cents/kWh or another plan which offers 25% discount on the regulated tariffs.

In such an arrangement, the following are the bills (excluding 7% GST) to be paid by consumers buying electricity.

SP Group:
Bill Amount = ($0.2279) x 350 kWh = $79.77

Fixed Price Plan:
Bill Amount = ($0.1778) x 350 kWh = $62.23

Discount-Off-the-Regulated-Tariff Plan:
Bill Amount =  (0.75) x ($0.2279) x 350 kWh  = $59.82

It is evident that consumers who plan to switch to a different retailer and engage in their price plans will enjoy savings.

Visit the following website to explore electricity plans with a trusted retailer, and stop worrying about the current quarter’s electricity tariff!