SINGAPORE - Electricity tariffs will be reduced in the first quarter of next year by an average of 8 per cent, or 1.99 cents per kilowatt hour (kwh), energy firm SP Services said in a statement on Tuesday.

The tariff reduction is due to lower cost of fuel for electricity generation, which fell by 16.4 per cent compared to the previous quarter.

"As fuel cost makes up about 50 per cent of the tariff, this translates to a proportional reduction of 8 per cent in the Q1 2015 electricity tariff," SP Services said.

This means that electricity tariffs for households will decrease from 25.28 to 23.29 cents per kwh from Jan 1 to March 31 next year. A family living in a four-room Housing Board flat, for instance, will save an average of $7.93 in their monthly electricity bill.

SP Services reviews the tariffs quarterly based on guidelines set by the Energy Market Authority, the electricity industry regulator.

For the last quarter of this year, the tariffs were lowered by an average of 1.6 per cent or 0.4 cent per kwh, compared to the previous quarter.