Electricity Tariffs May Go Up To 23 Cents Per kWh
July is set to be an expensive month for Singaporeans.
That’s because two essential services – electricity and water – will likely start to cost more.
We all knew that the water price hike was coming but a Channel NewsAsia report claims that electricity tariffs may also go up next quarter.
That’s because of rising oil prices: crude oil prices rose to US$70 (S$95) in May.
Currently, electricity tariffs stand at 22.15 cents per kWh. This is a rise from 21.56 cents in the previous quarter and 20.30 cents in the quarter before that.
The Channel NewsAsia report estimates that prices could rise beyond 23 cents per kWh in the coming quarter.
On average, households here use about 468kWh a month. With the price rise, the average electricity bill could rise to $108 from $103.
The link between oil prices and electricity
But is there a link between oil prices and electricity? After all, most of our electricity comes from natural gas these days, so why should oil prices play a role?
The answer lies in the way natural gas is priced and traded.
According to Channel NewsAsia, the widespread use of oil as a price marker means that gas imports are pegged to this value.
This could change in the future, should natural gas be traded with more flexibility.
Will diversification of providers help?
Experts question the effect of the diversification of Singapore’s energy market on prices.
There are plans to allow other providers besides SP Group to power our homes and a trial is already underway in Jurong.
The Channel NewsAsia report writes,
The very nature of retail competition will guarantee sizeable discounts off the current default Singapore Power (SP) bills.
News that solar power is becoming more accessible and common is also reason to cheer.
While its economic benefits have yet to be seen, greater adoption of the technology is likely to bring down energy prices.
Water prices going up too
And if higher energy prices weren’t enough, July also marks the second round of water price hikes.
Last February, Prime Minister Lee Hsien Loong called these hikes “absolutely necessary“.
With the second round of hikes, water tariffs in Singapore would have shot up 30% from two years ago.
Time to break open the piggy bank, folks.
Featured image from YouTube.