Now that Singapore has made the energy market open, households now have options to change retailers to get the best offer for electricity consumption.
A tariff refers to the amount per unit of electricity consumed by the electricity supplier. It is fixed by SP Services and regulated by the Energy Market Authority (EMA). It is adjusted every three months according to the cost of electricity generation. If you switch over to Senoko Energy, which promises low electricity tariff singapore commercial prices, you’ll be sure to save on your electricity bill.
Most would assume that the electricity tariff increases year on year. However, that is not the case if we take a look at the trend over the past five years. Hence, what changes the tariff every quarter?
Components of the electricity tariff in Singapore
Energy fuel costs
Electricity generation in Singapore is mostly by combusting natural gas and crude oil. As the price of natural gas in Asia is linked to the price of oil, the cost of natural gas is highly reliant on the cost of oil.
Hence, tariffs rise when oil prices increase. This is why households should change to an electricity retailer to secure low prices in the long run. If the oil prices fall, the regulated tariff will drop to mirror the change.
Grid network cost
This is the cost of transferring electricity from the generation plants to the power grid, then to the households, and is adjusted annually.
Market Support Services (MSS) charge
This includes the price of billing and measurement of the units consumed. This cost is also adjusted annually.
Market Administration and Power System Operation (PSO) charge
This fee is a portion of the cost required for the operations of the power system. This cost is also adjusted annually.
After breaking down the electricity tariffs, we can move on to understand the various prices of different plans.
Types of electricity price plans
The electricity retailers in Singapore offer mainly three kinds of electricity price plans, which we will go through below. Read on to understand how the tariff is related to the actual price of electricity in Singapore.
Constant Price Plan
Fixed-price plans let customers fix a constant rate for their electricity usage that will be fixed regardless of how the regulated tariff fluctuates. Hence, if the cost of oil decreases, the fixed rate you are paying will be greater than the regulated tariff.
Therefore, a constant price plan is best for customers who favor electricity bills that remain relatively unchanged over extended periods of time.
Discount Off Tariff (DOT) Plan
The DOT plan promises customers a cheaper rate with respect to the regulated tariff. This implies that regardless of the cost of oil, customers under this plan are assured that they get a tariff concession.
This plan is best for customers who are not keen on constantly checking the oil market and want the deals that the open electricity market provides.
Non–standard Plan (peak and off-peak)
The non–standard plans let consumers pay fluctuating rates as per the time of consumption. To put it simply, the rates during the peak periods set by the retailers will be higher. For example, if you constantly consume more electricity during the peak periods, you might be paying 25 cents/kWh. However, if you restrict your consumption to be during the off-peak durations, your rate could be around 15 cents/kWh. The tricky part of the non–standard plans is that the peak and off-peak periods are different for different retailers. Some might set 7 am to 7 pm as a peak period but might be setting a slightly higher peak rate, while others might set 7 am to 11 pm as a peak period but have a lower peak rate.
To get the best out of these plans, you must find out your electricity consumption pattern so that you can find the most suitable plan for your household.
A popular question that many ask is how electricity retailers are able to provide their customers with discounted rates compared to the regulated tariff. Well, all authorized electricity retailers in Singapore make bulk procurement from the power generation firms where they can strive for better rates for both households and businesses.
Apart from achieving the best electricity plan for your household, you should also know the additional costs.
Hidden costs of electricity in Singapore
Although switching to an electricity retailer can give you discounts off your electricity bill, there might be seven other hidden costs you might want to check out.
Transmission Loss Factor (TLF) fee
Electric power is transmitted at 230V to households and during the transmission through the grids, a portion of the energy is dissipated. This dissipation is known as the Transmission Loss Factor (TLF).
Some electricity retailers, such as iSwitch, waive this fee for their consumers. Hence, some retailers will absorb this fee, else you will be charged based on the measurements on their meter or the loss adjusted readings.
After Singapore committed to the Paris Agreement in January 2019, any electricity consumption is subjected to a carbon tax. As power generation firms have to pay $5 as carbon tax for every thousand kilograms of emissions, they have shared this tax burden with their customers.
Some electricity retailers waive the carbon tax for households, but not businesses.
Early termination charge
Most contracts by electricity retailers impose an early termination charge.
Prior to OEM, all customers had to deposit a security fee to get electricity in their houses, and electricity retailers also had to pay this fee. Upon cancellation of an account, the security deposit will be fully refunded if there are no outstanding payments.
The security deposit is different for different types of housing. Furthermore, electricity retailers are forbidden from charging a security fee more than double of your mean monthly electricity bill.
Advanced meter installation cost
A meter reading is vital for an approximation of a household’s electricity consumption and there are two kinds of meters in the market.
The first kind is the cumulative meter, which is what most homes have. The measurements are read personally by inspectors who will visit households once in two months.
The second kind is the advanced meter that calculates the electricity usage every half an hour, which also gives constant updates to consumers regarding their usage.
If you are changing premises, there might be an additional relocation charge which varies per retailer.
Paper billing charge
Although the majority of billings are paperless with online statements, customers can choose physical bills. Choosing physical bills can incur a nominal charge.
U–Save Rebate and your electricity bill
Every Singaporean household can apply for U–Save rebates that can alleviate part of their utility bill. Each household type will receive different amounts of rebates.
We hope that from this article, you can better understand the different parts of the electricity bill and make more well–informed decisions regarding your electricity bills.