Published December 2, 2008

Cheaper power on the cards for Q1 2009

Fuel oil prices and wholesale electricity prices down since Oct

By RONNIE LIM
Email this article
Print article
Feedback

(SINGAPORE) After surging through the year, the price of fuel oil used by power stations and, consequently, wholesale electricity prices here have fallen since October, latest figures show.

High sulphur fuel oil prices have fallen from a July peak of US$700 a tonne to US$400 a tonne in October and slipped further to an average of US$243 a tonne last month.
- Energy consultant Ong Eng Tong

This reinforces recent government indications that Singapore electricity prices could come down in the January-March quarter, after spiking by a record 21 per cent this quarter.

Dave Carlson, chief executive of the Energy Market Company (EMC), said in its latest bulletin that while there was a further surge in fuel oil prices in Q3 which lifted wholesale electricity prices (WEP) significantly, 'since October, the fuel oil price and, consequently, WEP have dropped'.

The wholesale electricity price is the net purchase price paid by electricity wholesalers here. It includes the uniform Singapore energy price (USEP), regulation charges, administrative charges and other components.

There is apparently little or marginal difference between the WEP and USEP.

An EMC spokeswoman said that the average monthly USEP in October dipped to S$172 per megawatt-hour in October, after rising from $185/MWh in June to $195 in July, $200 in August and falling to $193 in September.

November numbers are still being tabulated, she added.



EMC - which operates the wholesale electricity market - does not comment on the direction of retail electricity prices here.

Confirming the slide in fuel oil prices, energy consultant Ong Eng Tong said that high sulphur fuel oil prices have fallen from a July peak of US$700 a tonne to US$400 a tonne in October and slipped further to an average of US$243 a tonne last month.

This should help cool electricity prices here, he feels.

Following the latest 21 per cent spike in electricity tariffs here for the current October-December quarter - the highest quarterly increase in eight years, due to higher forward fuel oil prices in Q4 - Prime Minister Lee Hsien Loong indicated last month that tariffs could come down next year to pre-October levels.

Senior Minister of State (Trade and Industry) S Iswaran has said that tariffs for the January-March 2009 quarter will be made known this month after fuel costs, generation, transmission and distribution costs, as well as miscellaneous fees such as meter reading are computed and finalised. He was responding to a query about the Energy Market Authority's ongoing review of the electricity tariff-setting mechanism to better reflect prevailing fuel prices in the market.

There was public disappointment over the latest rise in electricity tariffs which came even as crude oil prices here slipped to US$50 a barrel levels.

EMC's figures showed that the WEP rose for a fifth quarter in a row to reach S$197 per megawatt-hour in Q3, up from S$115/MWh in Q2.

This followed the price of high sulphur fuel oil skyrocketing in Q3 to cross the US$100 a barrel mark for the first time, since the start of the liberalised electricity market here in 2003.