Singapore Number 2 in Raising Electricity Tariffs

Anyone interested in the expected tariff just need to read SP Power's press release.

2008 q1: oil price US$66.28
2008 q2: oil price US$74.40
2008 q3: oil price US$82.61
2008 q4: oil price S$155.14 (from S$112.35)

SP Power switched to S$, didn't explain why. It should be around US$114.

when times are good, you can do hike prices and attribute it to anything in the world and people will still be happy to pay albeit some grumblings.

when times are bad, you can still hike prices and attribute it to anything in the world BUT people will not be happy to pay anything more.

private or public, does it really matters now?

just pay lah...

Hi Jack,

It's not that I want to be rude or anything. In fact, I'm a friendly person. However, your comments does makes me angry with some of the points that you've raised. There you are going on and on about shareholder's interests, dividends etc. My point is that WHY ARE WE PAYING 3 MONTHS FORWARD OIL PRICES when 80% of our electricity are generated from Natural Gas. Don't tell me they record 3 month forward oil price (which actually is an estimate, and under accounting expense definition and accounting rules, it's not allowed.) into their accounting books? Surely they must have passed entries on their expenses on NATURAL GAS. Is it so hard to based the price of electricity on the cost of Natural Gas. Our "esteemed" minister argues that there isn't a good index to peg the price of natural gas to and therefore they peg it to oil. What the hell man......it's like you are ordering plain water and they are charging you for a cup of coffee for the costs of coffee beans, water, sugar and electricity used for boiling the water. Is it really that hard to set the prices of electricity based on fluctuating prices? They do have to pass entries into their accounting books isn't it? Can't they rely on that information since it will be audited anyway. It should therefore be more reliable to the forward prices formula. At the end of the day, I still don't see why privatizing our Energy markets can bring about more efficiency. Maybe I'm ignorant on such matters and if so, can some one teach / enlighten me on the subject matter? Why privatization will bring about more efficiency and therefore consumers will be better off at the end of the day? I simply cannot wrap my head around that idea.

Edmund,

go look at the definition of forward contracts in the context of financial markets or in this case natural gas. dont blabber. it doesnt makes u look any better.

privatisation is good if you are talking textbook, econs 101. since u mentioned that you have learnt econs you should noe the answer.

however, we live in a real world and thats when the academic theories and ideals of a laissez faire/free market sort of malfunction in the real world. esp when we are talking about infrastructure sectors, high capital industries, with natural high barriers to entry.

so privatisation is supposd to bring in more competition as a result deadweight losses which occur in theoretical monopolistic/oligopolistic markets gets utilised and the industry as a whole becomes more efficient.

however, if you are talking about the price levels per se, there is certainly something lacking in the pricing mechanisms here.

either the corporates themselves are exposing themselves to high levels of costs, in this case gas/oil/watever, and not hedging them well enough or they have been passing off these costs substantially over to the end consumers.

in a pure perfect competitive world, goods producers will find it hard to sell their products when they hiked their price levels. however, apparently in this case, the costs are easily transferred from the producers to us, therefore we are not living in a pure p.c world.

so the questions to be asked should be so,
are these producers/firms/corporates operating in an efficient manner? if not, what should we as end users do about it? is there a recourse for end users like us?
Or are these producers/firms/corporates behaving like a monopolistic entity? if so, is there anything the regulators can do about it?

Hi adiemuso,

My point that I want to make is why are we paying for Oil prices when we are not using 100% of the oil to produce our electricity. It has nothing to do with forward contracts definition or the hedging of risks. I don't plan to look good here anyway, since I'm ignorant on a lot of stuffs that you are talking about but you're missing my point by at least a mile. As for your comments on efficiency, does it mean that government managing it will be less efficient than being managed by free market itself? Are you subscribing to the Rational Economic Person theory whereby everyone is out for his / her own interests and the spill off / trickle down effect is that it will benefit the society as a whole?

Btw adiemuso,

I never once mentioned that I learnt econs.....are you confusing me for another person? Anyway, I did studied econs and how weird is it that most of the things i studied are not applicable in ahem....my country. Milton Friedman did mentioned on GST as an oppressive tax and it might do the society more harm than good if there were more middle class / low income groups.

Edmund,

You did study Econs, so I am not mistaking you for another.

And government managed versus private being efficient or not was not on my agenda.

Economic theories are largely based on Rationality. Of course there are examples that Rationality has failed like in what Mr Greenspan had recently admitted in his oversight.

Your point about prices being affected by Oil prices is exactly what i meant by pricing mechanisms.

for what I know Hong Kong's power supply and nature gas supply are from mainland China that able to supply hong kong for 50 years and cheaper than market price, hong kong have already sign the contract with China in May / June this year.

So I feel that is difficult to compare Singapore with hong kong in this area.

Singapore Govt. just don't do enough in alternative energy in the previous time that causes today high electricity tariffs. Singapore Govt. doesn't want to subsidy the cost of electricity unlike those countries in the graph.

in actual market there is a lot of countries Govt. subsidy the cost of electricity tariffs.

beside that I don't know that SP will it charge it higher cost a not.

All in the name of GREED, those people who are involved in all these profiteering business at the expense of the already so suffering citizens will have no offspring to carry their genes in singapore, this is just outright extortions.

No matter government take over power supply or SP services continue managing power supply or inviting 5 other power vendors to create "competition"... each and every one of them would like to make the $1b profit...
Think of it this way; put yourself into this big pair of shoes... If you were in the position to manage the power company, don't you think you want to earn significantly more money from the work you do and earn more and more each year (aka yearly increment and variable bonus)? Or would you be willing to work for free + forgo the increment and variable bonuses for the benefit of fellow citizens? Who can be so selfless? Not the people in SP services, not the people in government, not you and definitely not me.