SINGAPORE – Households in Singapore can welcome the new year with lower electricity bills, as the tariff for the first quarter of 2023 will drop by 2.7 per cent, even as the new goods and services tax (GST) of 8 per cent kicks in.
The electricity tariff before GST, from Jan 1 to March 31, will decrease from 29.74 cents to 28.95 cents per kilowatt-hour (kWh), said grid operator SP Group on Friday.
Taking into account the new GST rate of 8 per cent from Jan 1 – up from the current 7 per cent – the new tariff will be 31.27 cents.
The average monthly electricity bill for families living in four-room Housing Board flats will drop by $2.63 before GST, or $1.85 after taking GST into account.
Currently, a four-room HDB flat incurs an electricity bill of $106.25, including GST, for an average monthly consumption of 333.91 kWh. It will be $104.40 for the same usage in January.
The tariff had been rising since April 2021, before dipping slightly by 0.43 cent per kWh in the last quarter of 2022. This came amid high energy costs driven by rising global oil and gas prices that were exacerbated by the war in Ukraine.
Meanwhile, producer and retailer of piped town gas City Energy also announced on Friday that the gas tariff for households before GST will fall by 0.89 cent per kWh, from 22.73 cents to 21.84 cents per kWh from Jan 1 to March 31.
The new tariff will be 23.59 cents with GST.
Both SP and City Energy attributed the dip in prices to lower fuel costs compared with the previous quarter.
SP said on Friday that its energy costs have decreased by 0.79 cent per kWh.
These energy costs, which are paid to power generation companies, are adjusted quarterly to reflect changes in the costs of fuel and power generation.
Energy cost accounts for 77.9 per cent of the electricity tariff, while the remainder comprises the expense of transporting electricity through the power grid, and operations.
Dr Victor Nian, co-founder and chief executive of independent think-tank Centre for Strategic Energy and Resources, said the slight dip in electricity prices is due to the expected easing of oil prices in the first quarter of 2023.
But he added that the downward trend is not likely to be sustainable.
“With China opening up its economy, Asian demand for liquefied natural gas (LNG) is set to increase. Given the current situation with continuous rerouting of LNG ships from Asia to Europe, uncertainty will continue to cause volatility in gas prices,” he said.
Despite the decision by oil cartel Opec+ to keep production at current levels, uncertainty over Chinese demand and Russian supply means oil prices could stay around the US$100 per barrel range across 2023, added Dr Nian.
“This means electricity prices will remain high and likely increase further by mid-2023.”
Correction note: This article has been updated for clarity.
