Why are electricity prices increased when the prices of gas has fallen?

A reader asked this question in the Straits Times Forum. The director of the Energy Market Authority gave this reply. Is he giving the correct picture?

This is my understanding of the electricity market. The operators have signed up for gas prices based on long term contracts. The new operators are assured of a fixed price based on the “vesting contracts”, so they are largely protected. the old operators, such as Hyflux, signed on for long term gas supplies at high prices and have to sell them at low prices due to the oversupply of electricity. This is how Hyflux got into financial trouble.

Right now, the wholesale electricity market comprised of a mix of power suppliers who enjoy the relatively high prices offered by the “vesting contracts” and other suppliers who have to take deep losses due to the oversupply.

The average prices in the wholesale electricity market is probably higher than the prices that can be provided under the current gas prices, due to the long term contracts.

The reply from the EMA is probably correct, although it is somewhat brief.

However, his explanation did not provide the full picture. The electricity price charged by SP Services to their consumers has been increased.

However, many consumers have signed a contract, usually for one year, with a electricity retailer and enjoy a discount of about 25% off the benchmark prices charged by SP Services. Some are still paying the higher prices charged by SP Services, due to ignorance.

This is quite messy and confusing.

It would have been better for SP Services to charge a lower price for their electricity, maybe 20% less that the current prices, to be fair to consumers who did not know how to move to the alternative suppliers.  SP Service can afford to reduce their prices as they are enjoying a high margin under the current pricing.

Tan Kin Lian

 

 

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17 Responses to “Why are electricity prices increased when the prices of gas has fallen?”

  • Bapak:

    When consumers have no alternative due monopolizism by the government, is time to change government.

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  • N.Jungne:

    As Loong as that her pay is State Secret, susah la. Hi

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  • Bobo:

    We all knew the old tactic and old trick that have been around for 50 years. 70% love it that way. Just watch a video on how the trainer trained dogs to pickup stick he threw. The dogs raced to pick it up and rushed back happily to return it on the trainer’s hand. The trainer rewarded it in first attempt, but did not reward it on the several attempts. The faithful puppy would continue to follow instruction in hope to get rewarded again.

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  • patriot of TUMASIK:

    Who OWN SP and how much was PAID to the Govt…how to compare Hyflux leh!!! Ah Tan…Francis Paid Billions to run SP and even give a free Concert by the Blind Tenor at the Heritage Botanical Gardens…Hyflux??? bull of turning air into water Hyflus Boss should call herself David…the TH crony companies jump on the Bandwagon as agents and try to make an extra buck or two by offering better deals for the short term only lah!!!…the Perennial CON goes on and on and ON!!!…

    and…The sheep bleat on and on and ON!!! Yes Sir, we are Fools, NO? than Complete FOOLS… Yes??? Definitely!!!

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  • Sell off People's Key Assets?:

    Since 2008, Temasek has been selling away Singapore power assets as part of Temasek’s “divestment” efforts. Temasek sold away Tuas Power to China’s Huaneng Group for S$4.2 billion, the largest overseas purchase by a Chinese power firm.
    Temasek got a very good deal out of the Chinese as Huaneng’s winning bid which worked out to about 24 times the S$177 million net profit Tuas earned in FY2007.

    Tuas Power had been reported to have a generating capacity of 2,670MW at the time of sale.

    Later in September that year, Temasek sold its Senoko Power generating company to Lion Power Holdings for S$3.65 billion. Lion Power Holdings is a consortium led by Japan’s Marubeni Corporation. At the point of sale, Senoko provides over 30 per cent of Singapore’s electricity needs. Till today, it remains the largest power generation company in Singapore.

    Finally, at the end of 2008, Temasek sold off Singapore’s PowerSeraya Ltd to Malaysia’s YTL Power International Bhd with the plant valued at S$3.8 billion.
    The PowerSeraya plant was the second largest power generation company in Singapore in terms of installed capacity, with a total licensed capacity of 3,100MW, representing about 25% of Singapore’s total licensed generation capacity at the time of the sale.

    DBS Bank even provided S$2.25 billion of credit facilities to YTL Power to fund their purchase.

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  • oxygen:

    @ TKL

    THE ONE WHO IS IGNORANT COULD BE YOU. With climate change cutting out fossil fuels, future supply of energy feedstock might fall relative to demand, so electricity charges with HIGHER POPULATION EXPECTED from foreign influx COULD WELL MEAN THE SCALE COULD TIP THE OTHER WAY.

    THOSE WHO LEFT SP SERVICES might be BARRED FROM RETURNING TO “LOWER PRICES” from SP Services then.

    TKL :Some are still paying the higher prices charged by SP Services, due to ignorance.

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  • Singkism:

    True or False :

    Singaporeans generally NEVER question claims made by their garbrament.

    They base on Believing.

    If you do not think so, show me a instance when majority singaporeans demand independent audit of claims made gabrament, eg. Any statistics, GDP , reseeves amount, investment losses etc..
    .

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  • TruBlu:

    SOME OF MODERN SG SLOGAN$….

    TEACH LE$$, (L)EARN MORE(TUITION INDU$TRY??? IN THE BILION$$$$$)

    WORK LESS,PAY MORE,MORE,M O A R !!!!

    PAY MORE,GET LESS>>> like pub,singtel,LTA,ETC.

    LEVIES,SURCHARGES,GST ON LEVIES…\COE,,ERP,Pee and pee?

    oil price drops,USE ENERGY CONSERVATION AS REA$ON TO COLLECT MORE MONEY…
    OIL PRICE up a bit,PRODUCTION COSTS GONE HIGHER?

    AFTER OIL PRICE DROP AGAIN,DIAM-DIAM,MAK BODOH????

    LIFE IS $uch in $INNER$” CITY???

    GrassLOOTers oso try to scramble for BENEFITS???
    grassLOOTers and their relatives scramble for privileges???

    WHAT ARE GREASSROOT MEMBERS/LEADERS REALLY FOR?
    GETTING BENEFITS FOR THEMSELVES AND THEIR RELATIVES BY ABUSING THE SYSTEM FROM ECONOMIC TO SOCIAL TO LEGAL OR THEY ARE SUPPOSE TO BE BENEFACTORS OF LESSER SGS IN THE SOCIETY?

    CHECK AROUND AND ASK AROUND N YOU GET THE TRUE PICTURE…
    DONT SAY I SAY,SEE FOR YOURSELVES if you not open your eyes or have no personal encounter.

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  • Asd:

    What the point of your question ?
    You want drive wedge ?
    Ha Ha… just pay and shut up la policy and ownself take more more policy.. it for the good … ha ha..

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  • Asd:

    Policy that create a wedge to divide is a good thing to do but if people who want to drive the wedge then it’s a bad thing. Understand ? No ? Ha Ha..

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  • REGIME CHANGE is the solution:

    Another compelling reason for regime change.

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  • ShameYewCum:

    Singkism:
    True or False :

    Singaporeans generally NEVER question claims made by their garbrament.

    They base on Believing.

    If you do not think so, show me a instance when majority singaporeans demand independent audit of claims made gabrament, eg. Any statistics, GDP , reseeves amount, investment losses etc..
    .

    Maybe the 10-year series exam hacking or Gaming the exams made singkie students no need to Question since it’s just these questions and answers they need to know to pass.

    Sgreans lack innovation and creativity as a result. I will never let my kids study in Sg.

    Yours
    Profma ShameYewCum

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  • PAP CLOSE DOWN:

    Nowadays we can use solar energy. Cars can run without petrol. But Spore donch want. Why? Our power companies and petrol kiosks won’t make money.

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  • Sys of Believing:

    PAP CLOSE DOWN:
    Nowadays we can use solar energy. Cars can run without petrol. But Spore donch want. Why? Our power companies and petrol kiosks won’t make money.

    Yes, I have thought about this for long time.

    There seems to be under-adoption of electric. This suggests LACK OF SINCERITY and a Reluctance in really going green when it comes to electric vehicles. Of course buildings are going green, what we are talking about is electric vehicles. There are of course electric cars but clearly there is a perceived reluctance and insincerity in real adoption. So, I agree it could be due to OIL.

    BUT SINGAPOREANS do not generally demand for transparency and they base on Believing. A ROGUE GOV CAN CONSTANTLY USE THIS EXCUSE TO KEEP ON HIKING ELECTRICITY OR WATER.

    And buy military weapons from executable since countries in exchange for some agreements.

    In Gawd we thrust.

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  • patriot of TUMASIK:

    Sell off People's Key Assets?:
    Since 2008, Temasek has been selling away Singapore power assets as part of Temasek’s “divestment” efforts. Temasek sold away Tuas Power to China’s Huaneng Group for S$4.2 billion, the largest overseas purchase by a Chinese power firm.
    Temasek got a very good deal out of the Chinese as Huaneng’s winning bid which worked out to about 24 times the S$177 million net profit Tuas earned in FY2007.

    Tuas Power had been reported to have a generating capacity of 2,670MW at the time of sale.

    Later in September that year, Temasek sold its Senoko Power generating company to Lion Power Holdings for S$3.65 billion. Lion Power Holdings is a consortium led by Japan’s Marubeni Corporation. At the point of sale, Senoko provides over 30 per cent of Singapore’s electricity needs. Till today, it remains the largest power generation company in Singapore.

    Finally, at the end of 2008, Temasek sold off Singapore’s PowerSeraya Ltd to Malaysia’s YTL Power International Bhd with the plant valued at S$3.8 billion.
    The PowerSeraya plant was the second largest power generation company in Singapore in terms of installed capacity, with a total licensed capacity of 3,100MW, representing about 25% of Singapore’s total licensed generation capacity at the time of the sale.

    DBS Bank even provided S$2.25 billion of credit facilities to YTL Power to fund their purchase.

    Clear as a Mountain Stream…

    on why the Bills Keep RISING…

    they the IDIOTIC but $$$MONEYmad Govt Collect “PROFITS” in advance from all these Foreign POWER Players and we the silly People will have to Pay & Pay…while they will Say & Say…we will Leave No One Behind but all our Bags are Pack and ready to RunRoad!!!

    GD Star Rating
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  • Pharoah wanna Control:

    “It Will Be The End Of Energy Companies” :: The FORBIDDEN Technology of Nikola Tesla

    https://youtu.be/klXj198vY4A

    GD Star Rating
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  • Con you:

    The more they confuse you, the lesser the noise you’ll make.

    GD Star Rating
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