Electricity bills may go up next year as energy prices rise

While most consumers will not see an immediate increase in electricity prices, they may see a rise in their electricity bills next year with energy prices increasing globally.

Most consumers in Singapore have been "cushioned somewhat" so far, with 99 per cent of household consumers on standard price plans with retailers or the regulated tariff rate, said Second Minister for Trade and Industry Tan See Leng in Parliament yesterday.

About 96 per cent of businesses are also on fixed price or discount-off-tariff plans.

Said Dr Tan: "These have risen by far less than the price of gas or wholesale electricity. However, the sustained high fuel prices will eventually feed into our electricity bills to reflect the cost of electricity production."

Eligible households will continue to receive U-Save rebates to support them with their utility expenses, said the minister.

The Ministry of Trade and Industry will also work with the Ministry of Finance to monitor the situation and study whether further assistance is required for affected households and businesses, he added.

The minister was responding at length to 28 questions from MPs on electricity prices and energy security, following the recent exit of several retailers amid a volatile global energy market.

The current energy crisis is a result of several factors, he said. These are a confluence of increased demand from recovering economic activity, unusual weather events, lower coal production and a series of gas production outages around the world.

Many major economies are also securing sufficient fuel supplies for the winter, he added.

As Singapore relies on imported natural gas for almost all of its electricity production, it is susceptible to global shocks.

These volatile market conditions have led to five electricity retailers - iSwitch, Ohm Energy, Best Electricity, UGS Energy and SilverCloud Energy - pulling out of the market over the last three weeks.

These five retailers supply to about 9 per cent of all electricity consumers. Exiting retailers are required to first approach other retailers to take on those consumers at the same terms and conditions.

If this fails, the consumer will be transferred to SP Group, where they can choose to purchase electricity from another retailer.

On the issue of energy security, Dr Tan noted that over the years, measures have been put in place to secure Singapore's access to fuel supplies, such as having long-term supply contracts for piped natural gas with Malaysia and Indonesia.

Power generation companies are also required to stockpile at least 60 days of fuel reserves, in the event of disruptions to natural gas supply.

The Energy Market Authority (EMA) also ensures sufficient generation capacity to convert fuel into electricity. There needs to be a reserve margin of at least 27 per cent above peak electricity demand. This figure currently stands at 52 per cent.

"We have sufficient fuel supplies and generation capacity today. However, given the unprecedented scale of this energy crunch, we are leaving nothing to chance," Dr Tan said, adding that EMA has been working closely with industry stakeholders on pre-emptive measures to further secure Singapore's fuel and electricity supply.

Singapore will also be diversifying its energy sources over the longer term, such as by ramping up its solar capacity by 2030, and importing low-carbon electricity.

Dr Tan said: "Beyond this, we will continue to explore other low-carbon alternatives like hydrogen as well as geothermal energy. Collectively, these measures will make our power system more resilient and less susceptible to price and supply risks."

Responding to a question from Mr Gerald Giam (Aljunied GRC) on whether the Government will consider a special one-off additional electricity rebate to assist low-income households, Dr Tan said his ministry is exploring more ways to help with the Ministry of Finance.

Households living in four-room or smaller HDB flats receive U-Save rebate vouchers to help them with utility bills, with rebates amounting to about six months of bills per year for some.

And while the Government will continue to support lower-income households, Singaporeans should adopt energy conservation as a way of life, as Singapore will have to import natural gas for most of its electricity needs, said Dr Tan.

He was responding to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) who asked what more the Government can do to help consumers further reduce their energy consumption.

Dr Tan said: "We can start small, we can turn the lights off when we're not in the room. We can opt to use the fan more often rather than using air-conditioning... and switching to more energy-efficient appliances where possible."