Electricity bills to go up, and gas prices to fall

Households can expect higher electricity bills and lower gas bills for the next three months, starting tomorrow.

Electricity tariffs for households powered by the SP Group are set to rise by an average of 3.5 per cent in the first quarter of next year, the energy utilities provider said yesterday.

This is mainly due to higher energy costs compared with the previous quarter, SP Group added.

For these households, electricity charges will go up by 0.81 cent per kilowatt hour (kwh) for the period from Jan 1 to March 31, compared with the previous quarter.

Excluding the goods and services tax (GST), this translates to an increase of 23.43 cents per kwh to 24.24 cents per kwh for households powered by SP Group.

This rate is the highest since the period from October to December 2014, when it was 25.28 cents, before GST. The previous highest rate was 24.22 cents from July to September this year.

The latest increase means that the average monthly electricity bill for a family living in a three-room Housing Board flat will go up from $58.51 to $60.53, a rise of $2.02.

It will go up from $79.68 to $82.44 for a family in a four-room HDB flat, a rise of $2.76; and from $92.75 to $95.95 for a family in a five-room HDB flat, a rise of $3.20.

SP Group reviews electricity tariffs quarterly, based on guidelines set by the regulator, the Energy Market Authority (EMA), which approved the new pricing.

A key determinant of the tariff is the cost of fuel and power generation.

Professor Subodh Mhaisalkar, executive director of the Energy Research Institute at Nanyang Technological University, said the cost of electricity generation typically makes up 75 per cent of the tariff, and as energy costs go up, it is natural for the costs to be passed on to customers.

He added: "The tariff hike would be directly correlated to global energy prices, plus supply and demand pressures."

He noted that consumers who have switched to a fixed contract with an energy retailer under the Open Electricity Market would be glad that their costs are locked in, and believes the latest hike would lead to more consumers considering a switch.

In October, an EMA survey found that four in 10 consumers had made the switch, and enjoyed 20 per cent to 30 per cent savings.

[[nid:451540]]

Sembcorp Power's vice-president for retail Lim Han Kwang said the hike might incentivise customers who have yet to switch to an alternative power retailer to look for better-value options.

He added that the rise in the SP tariff does not have a direct impact on Sembcorp Power's customers, as its power retail business is backed by Sembcorp's power generation business.

City Gas, which reviews gas tariffs quarterly, also announced yesterday that gas prices will fall from tomorrow.

The gas tariff for households will dip by 4.22 per cent, which means they will pay 17.23 cents per kwh in the first quarter of the year, down from 17.99 cents per kwh, before GST.

City Gas said the lower gas prices are due to a decline in fuel costs compared with the previous quarter.

Asked why electricity prices are rising and gas prices falling, an EMA spokesman said: "The difference between the electricity and town gas tariffs is mainly due to the different fuel types used and their prices moving in different directions."

This article was first published in The Straits Times. Permission required for reproduction.