SINGAPORE - Households will soon have slightly lower electricity bills, as the electricity tariff for the last quarter of the year will decrease by 1.4 per cent, the first time it has fallen after more than a year of increases.
The electricity tariff before goods and services tax (GST), from Oct 1 to Dec 31, will decrease from 30.17 cents to 29.74 cents per kilowatt hour (kWh), said grid operator SP Group on Friday.
The electricity tariff has been continuously rising since April last year, amid high energy costs driven by the rising global gas and oil prices exacerbated by the war in Ukraine.
SP's lower electricity tariff would mean that the average monthly electricity bill for a family living in a HDB four-room flat will decrease by $1.55 (before GST).
Meanwhile, producer and retailer of piped town gas City Energy also announced on Friday that the gas tariff for households will decrease by 0.36 cents per kWh, from 23.09 cents per kWh to 22.73 cents per kWh from Oct 1 to Dec 31.
Both SP and City Energy attributed the fall in prices to lower fuel costs compared with the previous quarter.
SP said on Friday that its energy costs have decreased by 0.43 cents 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.
The cost of fuel accounts for 78.5 per cent of the electricity tariff while the remainder comprises the cost of power generation, which includes manpower and maintenance of power stations.
Dr David Broadstock, a senior research fellow at the National University of Singapore’s Energy Studies Institute, said that although Singapore uses natural gas for power generation, its gas purchase contracts are pegged against oil prices.
In the recent three months, global oil price benchmarks have fallen from more than US$100 (S$143) in the preceding quarter to around US$88, he said.
However, the respite from energy price increases could be a short one and the fall in electricity tariff may not last, Dr Broadstock said.
This is because global energy markets remain volatile as they are still suffering from the impact of the Russia-Ukraine war, he added.
Russia was the world’s largest exporter of natural gas and the second-largest oil exporter. With much of Russia’s fuel taken out of the market with economic sanctions against the country, oil and gas prices have shot up.
There is also a looming embargo by the European Union on Russian oil that will “add a new layer of complexity” to energy markets, said Dr Broadstock.
Together with the European winter fast approaching, where even more energy will be required for heating, the increase in demand will potentially drive oil prices up further, he said.
The “depth and durability of the global energy crisis” is reflected in the emergency measures which Europe has had to take. These include energy rationing, restarting coal power plants, as well as unprecedented energy subsidies to cap energy bills, he noted.
Germany, for instance, on Thursday rolled out a €200 billion (S$319 billion) package to shield consumers and businesses against the impact of soaring energy prices.
