The current electricity tariff, as of writing (April 2019) is 24.39 cents per kWh, inclusive of GST. However, with the introduction of the Open Electricity Market (OEM), it is now possible to get a cheaper rate than this tariff.
Having the OEM in place means that there are now 13 retailers providing the nation with electricity; increasing competition in the marketplace and trying to increase market share by providing a range of innovative offers and plans to consumers.
Let us look at how tariffs – which are regulated by the Energy Market Authority (EMA) – are derived, and look at alternative options available in the OEM.
Regulated Residential Tariffs
By default, Singapore households buy electricity from SP Group, an EMA-regulated market support services company. SP Services’ tariffs are reviewed on a quarterly basis and are regulated by the EMA to reflect the actual electricity costs. This tariff includes two key components – cost of fuel and non-fuel cost.
Commercial contracts of oil prices is linked to the cost of fuel or imported natural gas. This changes depending on the conditions of the global market.
This tariff component is calculated using the average daily prices of natural gas in the previous quarter’s first two-and-a-half-month period. The average price of natural gas between January and March, for example, is used to set the tariff between April and June.
About 95% of Singapore’s electricity is derived from processing imported natural gas, the prices of these gases are hinged on oil prices. As of April 2019, fuel cost is set at 16.89 cents/kWh
This cost is related to the generation and supply distribution of electricity to households. This includes four components which are power generation cost, grid charge, market support services (MSS) fee, and power system operation and market administration fees.
Such fees and charges exists to support the operation and maintenance of different structures of the market such as power plants, billing and administration.
Getting Cheaper Electricity
The Open Electricity Market means there is now more competition that opens different avenues of purchasing electricity, aside from SP Group. Thirteen retailers in general provide two standard plans for residential and business consumers in Singapore to choose from – Fixed Rate plans and Discount-Off-the-Regulated-Tariff plans.
Fixed Rate Plans
This plan locks a consistent rate for you to pay for your electricity, throughout the duration of your contract. This means that no matter what, you’ll get a reliable bill each month. Fluctuating consumption is the only factor affecting that bill.
If you are able to switch to this plan when the regulated tariff is particularly low, and then the oil market price rises, you may save money over what you would otherwise pay on the regulated tariff or other plans. Prices for these plans starts from 17.62 cents/kWh.
This plan allows you to enjoy a particular discount off the regulated tariff, no matter how high it rises or low it falls. This means you will always be paying lower than the regulated tariff, by a certain percentage. Discounts starts from 15% off the regulated tariff onwards.
From the explanation above, those who intend to switch from SP Group to another electricity provider will definitely see some savings in the future.
Forget about regulated tariffs, widen your options by exploring suitable electricity plans in the OEM.