The Singapore Power Group (SP) controlled the entire retail electricity market before the launch of the Open Electricity Market. SP supplied power to households at a quarterly-reviewed rate. The Energy Market Authority, also known as Energy Market Authority (EMA), regulated the tariff to make it as fair as possible.
The launch of the Open Electricity Market has opened doors for electrical supplies to supply electricity to households across Singapore. This has created healthy competition, which guarantees fair prices for consumers. To understand how to calculate the PUB electricity rate Singapore, it would be best to understand how electricity rates in Singapore work and how you can minimize electricity costs.
First Things First, What Exactly is the SP Electricity Tariff?
The Singapore Power Group is tasked with the responsibility of supplying electricity to consumers throughout the country. The government gives SP enough funds to supply electricity to all consumers and to carry out maintenance works.
Understanding how the SP tariff works is the key to understanding the PUB electricity rate in Singapore. The rate is a combination of both fuel and non-fuel costs. Read on to learn more about the SP electricity tariff.
About 95% of electricity here in Singapore is generated using natural gas. Natural gas is imported using social contracts according to the global fuel prices. Almost all Asian countries follow this procedure. Since the oil market is very volatile, electricity rates here in the country keep fluctuating.
Hence, the electricity tariffs for the first quarter are determined by the average natural gas prices for the first two and half months in the last quarter. The authority has taken this approach to cushion citizens from sudden price hikes. Moreover, Singapore Power Group purchases electricity from electricity generation companies and includes fuel in the tariff.
Apart from fuel costs, non-fuel expenses also have a huge impact on the SP electricity tariff. Non-fuel costs are a combination of expenses used to generate and supply electricity to consumers throughout the country. Several factors come into play when it comes to non-fuel costs, including:
- Network Costs. These costs include transportation costs of supplying electricity through the national grid.
- Market Support Services. Also known as the MSS fee, these costs involve normal operation costs, including meter reading, data management, billing, research, and development.
- Market Administration and Power System Operation. These costs include the management of the wholesale electricity market and the everyday running of the power system in the country.
Understanding the Role of Retailers in the Open Electricity Market
From the foregoing, it is evident that SP does not control the price of electricity in Singapore. That is why it focuses on recovering the cost of electricity production and supply. And since the energy market in the country is open, the SP group leaves the responsibility of transporting electricity to the suppliers while carrying out its mandated role.
Electricity suppliers can sell their electricity directly to consumers or buy electricity in bulk and then sell it to the consumers. Wholesale electricity prices in the country are influenced by global prices and local demand and supply forces.
The open market prices have brought several changes to the electricity industry in Singapore, including innovation and competition. Suppliers have to come up with innovative ways of supplying cheap electricity while working towards their business objectives.
Choosing the Best Supplier
With the vast availability of suppliers in the market, consumers should take the time to choose affordable and supplementary tariffs while getting reliability and reliability. Consumers can now choose plans that suit their electricity patterns and consumption.