Basis for Latest Increase in Electricity Tariffs and Gas Prices

1 Mr Liang Eng Hwa asked the Minister for Trade and Industry (a) what is the basis for the latest increase in electricity tariffs and gas prices; (b) whether the consumption of electricity and gas has increased as more residents work from home; and (c) whether increased development in alternative sources of energy has helped reduce the overall cost of electricity for consumers.

The Second Minister for Trade and Industry (Dr Tan See Leng) (for the Minister for Trade and Industry): Mr Speaker, Sir, good afternoon. I thank the hon Member Mr Liang Eng Hwa for his question. I have circulated a chart which has been placed on Members' seats, so that it can show clearly my explanation. [Please refer to Annex 1.]

Sir, electricity tariffs and gas prices generally move in tandem with global fuel prices and they have averaged around 24.58 cents/kWh and 18.36 cents/kWh respectively, since January 2018. Since dipping to their lowest levels in the past 20 years in April 2020, fuel prices rose by 46.6% in the third quarter of 2020 – the quarter that has just passed – and this is in tandem with the resumption of global economic activity. So, the electricity and gas tariffs therefore rose to 22.93 cents/kWh and 17.19 cents/kWh in the fourth quarter this year, as fuel prices rebounded.

However, the electricity and gas tariffs in the third and fourth quarters of 2020 still remain lower than in the first quarter of 2020. And the prices, the tariffs are amongst the lowest since January 2018. So, the prices for this last quarter that has just passed, are still amongst the lowest since January 2018.

For electricity tariffs in particular, it is also worth pointing out that Q4 2020 tariffs still remain at 11.6% lower than Q1 2020 and 6.7% lower than the average electricity tariff between January 2018 and September 2020. May I request for all Members in this House to refer to the chart for more details; I think it will give a much clearer explanation.

Around 47% of all households will not be affected by the new tariff prices because they have already switched to the Open Electricity Market.

Alternative energy sources today constitute a small proportion of our power generation because of our natural geographical limitations. However, our Government is actively partnering industry partners and industry players to deploy more solar power to enhance our energy resilience, our competitiveness as well as longer term sustainability. We aim to increase our solar capacity by five-fold. Today, we are at 0.4 gigawatt-peak or GWp. We are trying to achieve at least 2 GWp by 2030 – in about 10 years' time. And we hope that that will contribute to around 3% of our energy consumption in 2030. Consumers who are interested to procure solar power can do so by engaging our local solar companies.

Moving on to households’ average monthly electricity and town gas consumption, and if we looked at the consumption from April to July 2020 – this is for the monthly average electricity and town gas consumption – it was 16% for electricity and 34% for town gas. So, 16% and 34% higher compared to the same period last year respectively. It is a difficult point to note on discussion, so, I want to repeat that: households' average monthly electricity and town gas consumption from April to July 2020, was 16% and 34% higher compared to the same period last year, respectively.

This is mainly due to the fact that Singaporeans spent more time at home during the circuit breaker period and during the early stages of our phased re-opening, as part of our national efforts to manage local community transmissions of COVID-19.

We have also provided Singaporean households with more support for their utility bills this year. Every household with at least one Singapore Citizen received a one-off $100 Solidarity Utilities Credit in their July or August SP Group utility bill. The GST Voucher – U-Save that eligible households receive has also been doubled this year through a one-off GST Voucher – U-Save Special Payment. Eligible HDB households with five or more members also received a first tranche of further GST Voucher – U-Save rebates of between $60 and $100 per household in October, with a second tranche to be disbursed in January 2021.

Before this year, the annual amount of GST Voucher – U-Save that households in 1- and 2-room HDB flats received was equivalent to about three to four months of their utilities bill. Those living in 3- and 4-room HDB flats received support equivalent to about one to two months of their utilities bills on average. And this is very targeted. We want to make sure that the support is given to families most in need and hence, the higher quantum in terms of the GST Voucher – U-Save that the households in 1- and 2-room HDB flats received compared to those in 3- and 4-room flats.

With the additional support this year, households in 1- and 2-room HDB flats will receive support equivalent to at least six to eight months of their utilities bills on average. And households living in 3- and 4-room HDB flats will receive support equivalent to at least two to four months of their utilities bills.

Mr Speaker: Mr Liang.

Mr Liang Eng Hwa (Bukit Panjang): Thank you, Sir. Two questions, the first related to communications. When the tariff announcement was made, the headline that came up was that there was a 9.3% increase for the month of October to December. It came across from almost every media outlet. So, what the Minister just explained gave a lot of context and details that indeed, only a certain percentage of the population is affected – about 53%. So, such headlines do cause anxiety, especially during this period where the environment is really difficult and indeed, residents have consumed more electricity because of working from home, staying at home more often. So, I want to ask the Minister how we can better communicate this, so that we do not cause unnecessary alarm or concern when residents see the headline number of 9.3% increase.

The second question is, the Minister mentioned that the tariffs affected 53% of the households and the remaining 47% households are not affected. Given the unsettling effect of price changes quarter-to-quarter, would the Ministry perhaps use this opportunity to encourage more Singaporeans to go on the fixed price plan, so that there is some certainty; whether that can be pushed out to more residents to adopt and to sign up; whether there are other incentives that can encourage our Singaporeans to sign up as well?

Dr Tan See Leng: I thank the hon Member Mr Liang Eng Hwa for his suggestion. In terms of the communications to the households, Mr Speaker, Sir, if you look at the breakdown of all of the utilities bills that SP and some of the retailer send out to the households, these are detailed breakdown in terms of the tariffs charged. At the same time, in terms of the rebates, many of the households in the 1-, 2-, 3-room and 4-room flats would have gotten their rebates. In terms of those rebates, as I have alluded to earlier on, in the 1- to 2-room flats, they get between six and eight months of rebates, and for the 3- and 4-room flats, they get between two and four months. We believe that that has been communicated quite adequately across. Of course, in terms of communications, we will find ways and means in which we can continue to improve and further fine-tune how to educate many of our households in terms of managing their utilities bills.

One of the key initiatives as a result of these fluctuations or volatility of prices, it is important for us to note that our tariffs are based on what is the prevalent crude oil price. It is benchmarked against that. Ninety-five percent of our electricity is generated by the generating companies or gencos using piped and liquified natural gas from overseas.

It is in the interest of many people to switch to the Open Market retailers, to switch onto some of these packaged price plans, as what was surmised by the hon Member Mr Liang Eng Hwa. If it is possible, most households should look at many of these plans that are available and move on to a more fixed price package for more certainty in electricity prices. Because I think in the ensuing quarters ahead, there will continue to be more volatility and fluctuations to happen.