This post was written in collaboration with the Energy Market Authority (EMA). While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.
As a homeowner who is paying her own electricity bills, the rising electricity prices have been a recent concern for me.
Sure, I’ve been “protected” from the electricity price surge thanks to my 3-year contract with an electricity retailer. However, all good things (like my current contract rate of 17.78 cents per kWh) eventually come to an end, and new contracts are priced higher. What’s within my control is that I can actively seek out the best-in-market electricity contracts at this moment, instead of just letting my rate be “adjusted” by my provider.
So like any informed customer, I set out to do my own research to find out why electricity prices have been on the rise recently, what are the current electricity price plans offered (plus promotions), and any trends that can help me decide the length of contract I should sign up for and steps I can take to manage my own electricity consumption amid the price increase.
Here’s what I found out:
This is not the highest that the electricity tariff has been
Referring to historical data of the electricity tariffs since 2005, I realised that our current electricity tariff of 25.44 cents per kWh (not inclusive of GST) is actually not the highest electricity tariff we’ve seen.
In fact, the highest recorded electricity tariff was 30.45 cents per kWh (not inclusive of GST) from October to December 2008. Even when you look at the past decade, there was a similar peak recorded at 28.78 cents per kWh (not inclusive of GST) from April to June 2012, due to higher fuel prices resulting in higher power generation costs.
Taking this historical data for the last 10 years, I then plotted my own chart on Excel:
At a glance, I noticed that electricity tariffs have hovered between 20 cents to 28 cents per kWh in the past decade or so, and that they generally move in tandem with global energy prices. Also, after the 2012 peak, electricity tariffs decreased.
Actually, I’m quite surprised (and relieved) how electricity prices haven’t really changed much in the past decade, despite inflation of about 2% each year. Also, according to benchmarking studies regularly commissioned by the Energy Market Authority (EMA), our regulated tariff is comparable to that of similar cities around the world.
You see, this is despite the fact that Singapore is a very small country, without access to large expanses of renewable energy sources, unlike, say, Norway. Nevertheless, we are still mindful of the energy sources we use, opting for cleaner fuels like natural gas instead of still relying on cheaper but more pollutive fuels such as coal. Some countries offer fuel subsidies resulting in lower electricity costs for their consumers. But this wouldn’t work well here as it benefits those who consume more and won’t be sustainable in the long run unless we are resource-rich.
There are a lot of external factors that affect electricity prices
Truth be told, plenty of external factors affect the rise and fall of electricity prices.
Indeed, as a resource-constrained country reliant on energy imports, Singapore is a price-taker and is at the mercy of what’s happening globally. We rely heavily on imported natural gas for our electricity supply — around 95%.
The most direct would be fuel price increases due to a multitude of reasons, one of the latest to join the fray being the Russia-Ukraine conflict. Naturally, this would affect energy supplies as Russia is one of the world’s largest energy producers. Minister for Trade and Industry Gan Kim Yong also noted during the Budget 2022 debate that “one key area we will be significantly impacted by the conflict in Ukraine is energy cost, as we import most of our energy needs”.
To make matters worse, the world had already been facing an energy crisis due to the ongoing Covid-19 pandemic. When the coronavirus first hit and countries went into lockdowns, the economy slowed, leading to a sudden oversupply of fuel and later a decrease in production.
Now, as economies are emerging from the pandemic, the current energy supply has yet to keep up with the ramped up demand — leading to a shortage and hence increased prices.
In addition, seasonal factors such as countries stockpiling for winter would also account for electricity price increases. Severe weather events likely brought about by climate change are also affecting the production of renewable energy, the latest of which being Storm Eunice.
While I admit there’s discomfort seeing my electricity bill increase, I’m still thankful that EMA has in place measures to ensure that Singapore’s energy supplies remain sufficient. Last year, Europe was at risk of power outages during winter due to insufficient gas reserves. And closer to home, China experienced several power cuts in September/October 2021 just before their coldest season.
If I consider the relatively low electricity prices that I’ve been enjoying over the past decade and the current low fixed rate for my electricity contract, I guess the “savings” can help me stomach the higher electricity prices today.
It’s inevitable. All costs will eventually go up. From my research, I realised that the lower electricity prices I enjoyed earlier was due to an excess of natural gas supplies and overcapacity in power generation. When times are good and lots of supply are available, prices will naturally be lower.
However, today, the situation has changed and low prices are no longer possible. It is not sustainable for the power generation companies to sell electricity at a loss.
I’m also hopeful that, based on the historical electricity tariffs chart, electricity prices will eventually normalise when supply catches up with demand and when the Russia-Ukraine conflict is resolved (ASAP, please).
Meanwhile, I’ll turn my focus to things within my control — what can I do to manage my electricity costs? Which brings me to the next point…
Next step: Make more efficient use of electricity
There’s no way for me to single-handedly halt wars or control adverse weather events. However, what I can do to ease electricity costs on my own wallet is to make more efficient use of electricity.
This means I only consume the electricity I need, switch to energy efficient appliances, adopt energy saving habits, make my living space more energy efficient and find other ways to manage my electricity consumption.
For example, while I’m still guilty of turning on my air-conditioner during those really hot and humid spells, I make sure to only do so at night (no point “fighting” with the sun’s heat), at the optimal temperature of 25 degrees Celsius. I also close all my windows and doors to keep the cool air in for longer, and turn off the air conditioner after 30 minutes when my room has been cooled.
For appliances such as my water heater, I only turn it on a few minutes prior to when I shower, and quickly turn it off afterwards. I turn off the main switch for home appliances that aren’t in use, such as my television, oven and mobile phone chargers (ever heard of “phantom/vampire AKA standby power”?).
Furthermore, I’m also doing my own due diligence to search for the best electricity price plans to save as much as possible. One place to compare the latest standard price plans is the Open Electricity Market Price Comparison Tool.
So yup, while Singapore is dependent on energy imports to meet our needs (we’re subjected to global energy market movements and impacted by its volatility, leading to a corresponding rise in our electricity prices), there are still ways for us to manage these costs. There’s also support from the government, in ensuring that we have enough energy supplies, keeping price increases as gradual as possible as well as utilities rebates.
As consumers, we can do our part to manage our energy consumption for a more sustainable future.