Saturday, 7 March 2009

Published March 7, 2009

Power tariff to fall 22% in April

By ZEINAB YUSUF

SINGAPOREANS can look forward to cheaper electricity when revised tariffs kick in on April 1.

Consumers on average will pay 18.03 cents per kilowatt hour (kWh) from April 1 to June 30 - a substantial 22 per cent drop from the current 22.93 cents per kWh.

This will be the lowest rate since April 2005 when the tariff was 16.06 cents per kWh.

The reduction is largely due to lower fuel oil prices, said Singapore Power subsidiary SP Services, which supplies electricity to all households and some industrial customers.

In line with the current tariff formula, the forward fuel oil price in January was used to set the tariff for the second quarter from April 1 to June 30.

The forward fuel oil price in January was $60.47 a barrel, which was 35 per cent lower than the $92.99 used to set the current tariff.

However, starting from the third quarter in July, tariffs will no longer be calculated using the current formula.

Instead, a revised formula will use the average fuel price in the preceding three months to determine the tariff for the subsequent quarter.




For example, the new formula would have used the average fuel oil price from January to March, rather than just January alone, to set the tariff for Q2 2009.

The revised formula will help reduce volatility in the tariff and allow for the use of more recent data to determine it.

The tariff is reviewed quarterly and adjusted in line with the changes in the cost of producing electricity.

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