READERS have flooded The Straits Times Forum mailbox with letters about the recent 21 per cent hike in electricity charges. Liaw Wy-Cin put some of their questions to the Energy Market Authority and got the following responses.

Crude oil prices are coming down and petrol stations are slashing pump prices. So why are electricity prices still going up?

Crude oil and fuel oil are two different products with two different prices.

Crude oil, the raw material pumped up from deep underground, is not used to produce electricity.

Instead, companies use fuel oil, which is made from refining crude oil. Electricity prices are therefore pegged to fuel oil prices.

The oil prices usually mentioned in the news refer to crude oil prices. The pump prices at petrol stations are pegged to crude oil, which is why the recent fall in crude oil prices led to cuts in petrol and diesel prices.

But 80 per cent of our electricity is powered by natural gas, so why are electricity prices pegged to oil prices rather than gas prices?

Asia does not have a benchmark for gas prices. Until its gas trading industry comes up with a gas index, electricity prices will be pegged to oil prices.

Read the full QnA in Saturday's edition of The Straits Times.