Why electricity retailers' rates are better

File photo showing a man flipping a switch on an electrical board.
File photo showing a man flipping a switch on an electrical board.PHOTO: ST FILE

Mr Albert Tang in his letter (Why are SP Group's rates higher than retailers'?; Jan 16) asked why electricity retailers are able to offer lower rates than the regulated tariff in the Open Electricity Market.

The regulated tariff, charged by SP Group and approved by the Energy Market Authority, reflects the long-term costs of producing and delivering electricity in Singapore, such as the costs of building and operating the power plants and maintaining the power grid.

On the other hand, the electricity rates offered by retailers typically reflect the current market conditions, level of competition and short-term costs of producing electricity.

Under current market conditions where electricity production capacity exceeds demand for electricity, we can expect market prices to be lower than the regulated tariff.

However, this may change over time based on market demand and supply.

Consumers should be aware that while the price plans offered by retailers are fixed for the duration of each contract, retailers, like all businesses, may adjust their prices and discounts over time.

Consumers who have switched to other retailers can also switch back to buying electricity at the regulated tariff from SP Group.

They should check with their retailers if there are any applicable charges when making this decision.

In the Open Electricity Market, consumers can also benefit from more choices and innovative offers, such as electricity generated from solar power, as well as value-added packages through bundled products and services.

Dorcas Tan (Miss)

Director

Market Development and Surveillance Department

Energy Market Authority

A version of this article appeared in the print edition of The Straits Times on January 23, 2019, with the headline 'Why electricity retailers' rates are better'. Print Edition | Subscribe