Electricity, gas tariffs to increase for next 3 months

Most households will see higher electricity bills for at least the next three months - and perhaps longer - while consumers could see prices of products rise.

Household electricity tariffs for the next quarter will go up by 5.6 per cent on the back of rising fuel prices. Observers say the higher power costs could also push up the prices of consumer goods.

The electricity tariff for the period from tomorrow until March 31 will rise to 25.44 cents per kilowatt-hour (kWh) - from the current 24.11 cents per kWh - excluding the goods and services tax (GST), said grid operator SP Group.

This means a household in a four-room Housing Board flat - which typically uses about 354 kWh of electricity a month - can expect its average monthly electricity bill to go up by $4.70.

A global fuel shortage has been nudging up the price of electricity over the past few months.

About 95 per cent of Singapore's energy mix comes from natural gas, which is imported into the country via pipes from its neighbours or in liquefied form from all over the world.

Prices are also being driven up by a recovery in economic activity amid the pandemic and higher demand for electricity as certain countries enter the cooler seasons.

Fuel costs account for around half the electricity tariffs in Singapore, alongside factors such as the cost of maintaining power plants and transporting electricity through the grid.

The regulated electricity tariff set by SP Group is reviewed each quarter, and approved by the Energy Market Authority.

SP Group said imported natural gas prices are indexed to oil prices.

It added: "Over the past few months, a confluence of recovering economic activity, severe weather events and a series of gas production outages have sent global energy market prices significantly higher. These factors have raised electricity prices in many markets."

Energy economists say the elevated electricity prices could last for at least half a year.

Dr David Broadstock, a senior research fellow at the National University of Singapore's Energy Studies Institute, expects high prices to persist for at least the next six months.

He added that economic uncertainty triggered by a renewed round of lockdowns in response to the Omicron variant could keep prices elevated.

"Supply chains for varying energy usage levels were not designed to scale up and down with the scale and frequency that economies are closing down and opening up, creating room for short-lived but significant supply and demand imbalances," Dr Broadstock noted.

He said higher energy costs can affect prices of all goods and services, but added that high fuel prices will not persist indefinitely.

OCBC Bank economist Howie Lee said the high oil prices may continue into 2023.

After beginning the year at US$52 a barrel, Brent crude oil rose as high as about US$86 per barrel - the highest price since October 2018 - before tailing off at the end of the year.

"High oil and gas prices drive up the costs of production and there will be secondary pass-through effects on prices of goods and services if oil prices remain elevated," said Mr Lee.

Meanwhile, gas tariffs for households will also increase in the coming quarter.

They will go up by 1.17 cents per kWh in a 6.1 per cent increase, said City Energy, the producer and retailer of piped town gas here.

Excluding GST, the rate will increase from 19.04 cents per kWh to 20.21 cents per kWh from tomorrow until March 31. This increase is also driven by higher fuel prices, said City Energy.

Financial adviser Chia Xian Min, 32, who lives in a five-room flat with her husband, two young sons and a helper, said the rise in her household's utilities bills will outstrip the inflation rate.

"But I won't change the way I use appliances... and what needs to be done, needs to be done," she said.