S'pore households should save electricity as costs increase due to fuel prices: Gan Kim Yong

SP Group announced on Sept 30 that the electricity tariff for households will increase by 3.1 per cent from October to December.
SP Group announced on Sept 30 that the electricity tariff for households will increase by 3.1 per cent from October to December.PHOTO: ST FILE

SINGAPORE - Households in Singapore are advised to conserve electricity as costs are set to rise following the doubling of fuel prices, said Minister for Trade and Industry Gan Kim Yong on Tuesday (Oct 5).

In a written parliamentary response that day, Mr Gan said fuel prices have more than doubled over the past 1½ years, impacting countries worldwide including China, Japan, Britain and countries in the European Union.

Price movements in the global energy market will affect Singapore, which imports nearly 100 per cent of its energy needs, said Mr Gan.

The minister was responding to questions by Mr Murali Pillai (Bukit Batok) on the rising price of natural gas, which is expected to cause a steep spike in electricity prices in Singapore in the next quarter, and efforts to cushion the impact.

Mr Pillai also asked how the Government plans to protect Singaporean households affected by the economic fallout of the Covid-19 pandemic while also encouraging them to be more energy efficient.

National grid operator SP Group announced on Sept 30 that the electricity tariff for households will increase by 3.1 per cent from October to December.

This is the highest it has been priced since the January to March period last year.

Nearly one in two households in Singapore purchase electricity from SP Group as at April this year.

The International Energy Agency reported that electricity prices were 54 per cent higher in the first half of this year compared with the same period in 2020 in major advanced economies worldwide.

This was due to rising fossil fuel prices caused by the onset of the pandemic last year as well as changes in electricity demand, it said.

Mr Gan said the impact of short-term spikes in fuel prices is mitigated here in two ways.

First, power generation companies buy the bulk of their natural gas under multi-year gas supply contracts. Second, they pass on some of this price stability to consumers through fixed price plans.

However, sustained high fuel prices will eventually feed into Singapore's electricity prices, said Mr Gan.

He said: "In spite of best efforts to deploy solar energy in Singapore, we are land constrained and will need to continue to rely on energy imports one way or another, and be subject to global price movements."

Mr Gan noted that wholesale electricity prices have been depressed below the cost of producing electricity in the last five years, due to overcapacity in generation.

He said: "With rising demand from sectors such as data centres, 5G networks and electric vehicles, we will see electricity prices rise and normalise.

"No company that is commercially run will sell electricity below cost perpetually."

Eligible households will receive Goods and Services Tax (GST) Voucher - U-Save rebates to support them with utility expenses, said Mr Gan.

Households in one- and two-room Housing Board flats typically receive rebates that amount to an average of about three to four months of their utility bills.

This year, an additional 50 per cent of rebates through the GST Voucher U-Save Special Payment was given in April and July.

Mr Gan also encouraged households to "use electricity prudently" through various ways.

Households can do so by tracking their electricity consumption patterns through the SP Utilities Mobile App and designing their homes to be more energy efficient with the help of the E2Singapore website, which is run by the National Environment Agency (NEA).

Last November, NEA and national water agency PUB also launched the Climate Friendly Households Programme to encourage one- to three-room HDB households to make the switch to resource-efficient appliances.

"Each eligible household is given e-vouchers to offset their cost of purchasing LED lights, energy-efficient refrigerators and water-efficient shower fittings through the SP Utilities mobile app," said Mr Gan.

"We encourage all Singaporeans to adopt energy conservation as a way of life - from designing an energy-efficient home to choosing energy-efficient appliances and adopting energy-saving habits," he added.