Maintaining cost savings tough in the long term

I am not convinced that the open electricity market is an effective cost-saving programme for the benefit of the citizens (All households, firms to get choice of power retailer; Sept 22).

Singapore is dependent on imported natural gas, coal and related petroleum products for the generation of electricity. The prices of these commodities are subject to fluctuations due to global demands.

We cannot live without electricity. The Government should be involved to keep the cost of it reasonable and affordable.

How do we expect the power retailers, all purchasing electricity at the same base price, to provide the service support currently offered by SP Group, and still be able to generate cost savings of about 20 per cent, on top of making a profit?

At present, SP Group checks the electric and water meters once every two months and bills us.

With the introduction of the retailers, the electricity consumption data collected will need to be transferred to them to organise the billings.

Is this not additional work?

I believe SP Group will still be billing us for water services and refuse removal.

With no distinct productivity and efficiency improvements, I can only deduce that the cost savings are just introductory offers by the retailers.

These are innovative offers, but they serve no purpose if there are no eventual long-term cost-saving benefits.

Contract lock-in periods are six, 12 and 24 months.

For consumers with time on their hands, it may be worth the trouble to review the charges and change retailers every six months.

But the administration cost will go up. There will be more work and less revenue for the retailers.

They are entrepreneurs. They will adjust the prices up, citing higher costs, without adding value and everyone will pay more.

Four of the retailers opted out of the Jurong pilot. It would help if we knew the reasons for it.

The property analogy cited by the Energy Market Authority in reference to the possibility of retailers charging lower rates does not hold. The property market is unique to Singapore. The fuel market is global and beyond our control.

Goh Boon Kai

A version of this article appeared in the print edition of The Straits Times on September 25, 2018, with the headline 'Maintaining cost savings tough in the long term'. Subscribe