The bizarre case for higher electricity tariffs

It was announced that the electricity tariffs will increase by 3.5% to 24.24 cents per kwh starting from tomorrow onward. This makes tariffs the highest since December 2014.

SP Group said that the increase is largely due to “higher energy cost compared with the previous quarter”. What is bizarre is that Singapore is overproducing electricity energy.

Realistically, when there is an over supply while demand remains constant, prices should go down. But we have a government that wants to charging higher Tariffs!?

This is not the only area affecting Singaporeans: Public transport fares are at their highest level! GST is inching higher by 28.5%! Yet the salaries of average Singaporeans depressed by opening an inflow flood of cheap labour?

 

Prabu Ramachandran

 

 

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23 Responses to “The bizarre case for higher electricity tariffs”

  • never voted pap:

    as long as we can vote, we vote OPPO.

    we have never voted pap, never will.

    we will for more hardship on 70% sheep.

    the more hardship on sheep, the merrier.

    nothing wakes up 70% sheep faster than harder hardship.

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  • RDB:

    Bravo Prabu Ramachandran! Let us see if any govt minister can abd able to to counter you at all! We wait but maybe long long until all you said to all forgotten lor!

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  • patriot of TUMASIK:

    SP belongs to a Malaysian Group who bid and won… with the Govt pocketing the billions up “FRONT”…Naturally, SP has to recover from their initial payment with INTEREST lor!!!…

    The Idiots??? diam2 lah!!! more to lose in the World Casino for the “j*n*” to play with

    Fools and their money will part if they keep Bleating Yes Sir!!! yes, sir!!! we are FOOLS!!!

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  • PUB get electricuted:

    Well, they will NEVER switch to solar power because they won’t make anything.

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  • Greedy Elites Cause All Evils:

    “Bizarre case for higher electricity tariffs” is an understatement.

    “Greed for more money and profits by self-enriching, unconscionable, heartless elites” is more appropriate.

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  • Bapak:

    Oppos had warned Sinkies70 during GE2015 rallies, but they bo-hint (pay no attention) instead gave away their valuable rights as sympathetic votes to a dead man.

    The Clown’s head swelled, has translated your sympathetic votes to the Old Hack as his to give him 200% free hand to run the country however he likes.

    The Clown is not even bothered about the Old Hack’s last wish. How can you support such kind of idiot? Stupid Sinkies70, you ain’t see no nothing yet. After his leave, his mathematics is how much more to tax you.

    Wake up, VTO!

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  • Fed-up:

    In the first place, it is absurd that our electricity
    is provided for, and thus controlled, by foreigners.
    Electricity is a basic and should be under the govt.
    Sorry, i forgot, scholars have no common sense and
    dun have a clue as to how how to deal with basics.
    Actually, they dunno how to deal with Anything!!!
    They should be banned….

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  • Financially Speaking:

    @ Prabu Ramachandran:
    Increase in electricity tariffs were due to over expansion in electricity generation after the LNG processing plant opened in 2013.
    https://www.ema.gov.sg/cmsmedia/Newsletter/2014/04/spotlight-on/singapores-first-lng-terminal-launched.html

    A number of existing electricity providers & new entrants (including Hyflux with TuasSpring) gleefully took up the PAP govt’s call & expanded without first by looking at the global context & S’pore’s own domestic consumption (hint: 10 million population target). Unfortunately, the situation changed drastically after 2014 oil price collapse:

    1. Oil prices fell dramatically in 2014 after Saudi Arabia took the drastic step of flooding the global oil market with excessive supply in reaction to the US threat of fracking (high cost oil production) & subsequent oil price collapsed post-2014;

    2. All oil & gas exploration & new production activities went into a tailspin as the collapsing prices couldn’t justify the capital spending re: Swiber Bonds, Ezra, many SGX listed Offshore & Marine companies et al;

    3. Saudi Arabia & OPEC have continued their price suppression policy for over 5 years now & still continuing. Despite the Iranian turmoil & fighting in Iraq, oil prices never recovered to the previous highs as a new threat emerged in 2019 – threat of an economic slowdown triggered by Trump’s trade war & tariffs against China.

    Hyflux’s TuasSpring electricity generation part couldn’t justify their high capital expenditure with the prevailing low energy prices & worse, the stagnant domestic consumption. They fell under the immense debt load!

    All the power generating entities who had expanded their electricity capacity now face the same problems as Hyflux!

    S’pore’s Economy itself has been transiting from a manufacturing core into a service industry. And as such, the electricity requirements had been stagnant at best or even declining.

    So, lower revenues from lower oil prices; a stagnant or declining consumer base (higher electricity prices lead to lower demand re: Economics 101); & locked in high capital depreciation rates of expansion = a recipe for financial disaster!

    S’pore, financially speaking, has a number of malinvestments hanging over our heads:
    * Electricity generation expansion which came into headwinds of lower oil prices, global economic slowdown & heavy financial “stress”;
    * A property oversupply looming over the horizon;
    * Jewels 4-5 month euphoric opening & sudden reversion to retailing doldrums; &
    * A number of S’pore real estate developments coming to fruition smack right into a US-China trade war; a slowing global economy & an uncertain future.

    What do you think?

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  • Unthinking and heartless:

    The gov just put a damper on many sgs already humble NY celebrations.
    What a heartless sgov.
    Even if rates go up by 50% they wont feel a pinch..
    But for many sgs its like sleepless nights at times trying to juggle the family budget.

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  • Wat else to say?:

    Daylight robbery. No other words !

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  • Asd:

    Wayang here wayang there
    Open electricity rubbish
    Then now up price
    Monopoly communists country

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  • TruBlu:

    $inkaput POWER.
    $INtell.
    DB$banksters.
    CAPitaLAN.
    $MRT.
    $b$.

    All only good at $ucking blood from sgs.
    All MONOPOLEE…so easy as abc to suck money.

    Segregate FOREIGN PROFITS vs DOME$TIC PROFIT$$$ N then come and tell us how you make money???

    No more B/$.
    ENUF OF SHIT STUFFS.

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  • mike:

    So funny one,
    Currency so strong,
    Purchasing power so weak,
    Things so much more expensive,
    Wagw so low,
    Ministars pay still highest,
    Same party still win majority…

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  • The Other Hard Truths:

    There is nothing bizarre. The PAP simply weaponizes money.

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  • REGIME CHANGE is the solution.:

    Another compelling reason for REGIME CHANGE.

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  • Harder Truths:

    The reality of a communist government is they take what they want, when they want, how they want. No such government can get enough.

    Any such country must fail economically – this is what history teaches us.

    Those that do not learn from history are doomed to repeat it.

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  • Steven Tan:

    I have always felt the govt is now a transactional govt – everything is like a business to them. No empathy.

    The PAP will definitely not be getting my vote next GE

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  • Truth:

    69% sheep, you “sympathize” with the old man who is dead & gone, now his little “Con-U”s milk you after milking him. Now who will sympathize with you?

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  • 70% lagi bizarre:

    Prabu

    What’s more bizarre are :
    1. The 70% voted them without questioning how much is really left in the reserves.

    2. 70% accept all hikes without questioning.

    3. 70% well educated fools study best but never invented what’s SG relies heavily on eg. Solar panel. Reverse osmosis, 5G, lithium batteries, supercomputers, MRI , XRAY, DIALYSIS MACHINES, cancer cure. Etc.

    Nothing.

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  • Pat Low:

    There is nothing bizarre with this round of electricity tariff going up when LNG spot prices are going down. There is no anomaly with electricity rates up and municipal gas rates down.

    Criticies PAP by all means, but with knowledge, not in ignorance. Criticising in ignorance exposes yourself to IB shooting you down. The only good thing is IBs are also ignorant on tariff.

    Everything is explained here. I blog to raise awareness. But do critics care to know the truth because you need to bother to read my lengthy blog.

    https://chem-post.blogspot.com/2020/01/the-truth-about-electricity-tariffs.html

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  • Pat Low:

    @ Financially Speaking

    Your argument for tariff increase is totally off.

    LNG is simply a raw material that power generation companies use. It is a variable cost of production. Their profit formula is simple (as for most manufacturers)

    1. Sales
    2. LESS Production cost (Depreciation, raw materials, direct plant overhead)
    3. = Gross Margins
    4. LESS Operation expenses
    5. = Profits

    To maintain profit level when raw material LNG goes up or down, adjust the sales price.

    In other words, oil price movement (which impact the raw material cost) is not the determinant to profitability. Competition is the constraint to sales price determination. With the huge overcapacity in power generation, gencos are pricing their prices low in order to get despatch for their plants. This resulted in gencos making heavy losses for the last ten years or so.

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  • oxygen:

    @ Pat Low

    SORRY, YOUR REBUTTAL OF @ Financially Speaking is (first part) accounting definition and the best of the rest tended towards fantasy.

    Natural gas consuming entities BOUGHT THEIR FEEDSTOCK (LNG) mostly on LONG-TERM CONTRACT of many years from producers because development of gas fields are very costly and need stability of demand and long-term fixed contract prices to find bankers funding gas field discovery/development.

    Singapore gencos buy their gas from Natuna fields in Indonesia and piped to end market here.

    Pat Low: @ Financially Speaking

    Your argument for tariff increase is totally off.

    LNG is simply a raw material that power generation companies use. It is a variable cost of production. Their profit formula is simple (as for most manufacturers)

    1. Sales
    2. LESS Production cost (Depreciation, raw materials, direct plant overhead)
    3. = Gross Margins
    4. LESS Operation expenses
    5. = Profits

    To maintain profit level when raw material LNG goes up or down, adjust the sales price.

    In other words, oil price movement (which impact the raw material cost) is not the determinant to profitability. Competition is the constraint to sales price determination. With the huge overcapacity in power generation, gencos are pricing their prices low in order to get despatch for their plants. This resulted in gencos making heavy losses for the last ten years or so.

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  • Financially Speaking:

    @ Pat Low:
    It is you whose totally off! You don’t even understand the dynamics of business.

    The Electricity Capacity in S’pore had expanded by nearly 3,000 MW in capacity between 2012 and 2014 to 13,350 megawatts (MW).

    Peak demand, however, averaged only 7,000 MW in the year to March 2017, leaving a spare capacity of 48 per cent in the system.

    These capital projects were both a huge fixed capital expenditure as well as a debt repayment for their project lenders as they need borrowings.

    Electricity generation are very capital intensive businesses with very little variable costs (other than gas prices which is tied with oil prices).

    This market is also heavily regulated with SP Group being a monopoly over retail pricing while the wholesale electricity market were subjected to market forces.

    https://www.businesstimes.com.sg/infographics/singapores-electricity-market

    Business Times published an article outlining the problems. Go read it before you comment, making yourself sounding so stupid!

    https://www.businesstimes.com.sg/energy-commodities/power-generation-sector-crushed-by-massive-overcapacity

    Electricity retail prices had been very sticky much like the petrol pump retail prices which had not declined since 2014.

    You have to ask yourself hard questions regarding market liberalisation & “open” markets in S’pore!

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