9 Hidden Costs to Watch Out For When Switching To OEM and Electricity Retailers

electricity price hidden costs

With the open electricity market (OEM) initiative in full swing, consumers are constantly comparing prices to suss out the cheapest electricity retailers and prices in town.

Most of us just compare the electricity retailers’ rates (the price per kWh), but there are actually more factors worth considering – except they’re usually listed somewhere in the deep, dark sea of your contract’s terms and conditions, such as this screenshot below:

An example of extra charges listed in the fact sheet, taken from Keppel Electric.

If you’re new to the OEM, read our Moneysmart Ultimate Guide to Cheapest Electricity in Singapore:

9 Hidden Costs of Electricity in Singapore

For your convenience, here are 9 hidden costs that will affect your electricity bill.

As a general rule of thumb, to prevent any unwanted surprises on your bill, you should still read your contract carefully before signing up for any electricity plan in the OEM. This is just a guide for hidden costs to look out for.

Contents

    1. Admin fees
    2. Security deposits
    3. Cancel auto-renewal electricity plans
    4. What is Transmission Loss Factor?
    5. Carbon tax Singapore
    6. Printed paper bill fees
    7. AMI Metre installation fee
    8. Early termination fees
    9. U-Save GST vouchers

1. Administrative charges – could be anything

There isn’t much to say about this, because like all other services that charge an admin fee… Nobody really knows what it’s for.

For instance, before they exited the OEM, electricity retailer iSwitch used to charge a $4.95 (excl GST) service charge. Here’s what it said on the website:

electricity price hidden costs

… so basically, this “service charge” is separated from the electricity price so it can appear to be cheap? #okcan.

But whatever – consider the admin charges as a fee for processing your application and for using their services. Just know that there’s no law regulating this fee, so make sure you read the fact sheet and are aware of what you’re paying.

2. Security deposit – not more than 2X your monthly bill

Electricity retailers sometimes take a security deposit from you when you create a new account with them. In fact, everyone of us paid SP Group a security deposit when we first got our homes powered too.

This is a deposit – not a fee – so it does go back to you… but in credits, and only when you terminate your account. In short, it’s to make sure you pay your last bill lah. According to the official OEM website, any excess must be refunded within 30 days after you have paid your last SP bill.

The security deposit varies from retailer to retailer, and it depends on the size of your home and your typical monthly electricity consumption. To determine your deposit, they may request for your previous bills or just base it off the national average for your type of home.

Here are all 9 electricity retailers in Singapore’s required security deposits:

Electricity Retailer Security Deposit
SP Group $40 to $800
Senoko $0
Geneco $50 to $220
Keppel Electric $0 to $350
Pacific Light $80 to $1,000
Tuas Power Same as SP, or 6% of SP’s security deposit
Sembcorp Power $50 to $200
Union Power $0
Sunseap $0
Diamond Electric $0

Security deposits do have a limit, and retailers are not allowed to collect a security deposit of more than 2X your average monthly electricity bill. So if your average monthly bill is $65, your security deposit will be no more than $130.

Not all retailers require security deposits though. Senoko, for example, currently waives the security deposit.

3. Auto-renewal clauses – make sure you cancel it before your contract ends

In your fact sheet, you might find a section labelled “auto-renewals”. Do check if your contract is an auto-renew or non auto-renewal electricity plan.

Here’s a screenshot from Sembcorp Power‘s 12 months Fixed Price plan contract stating that “automatic renewal is not applicable”.

Sembcorp Power's 12 months Fixed Price plan contract stating that "automatic renewal is not applicable"

Thankfully, it’s not automatically renewed. There are some regulations in place to hinder electricity retailers’ opportunistic attempts to carrot your money. According to EMA’s website, “If you choose a contract with automatic renewal, the retailer must offer a renewed electricity rate that is lower than the regulated tariff at the point of renewal.” Most retailers are also required to inform you of the renewal 10 business days beforehand, and you can decide again then.

To avoid renewing your contract with a lousy rate, make sure you’re aware of when your contract expires and cancel your plan before it’s too late.

4. Transmission loss factor: 1.036482

When electricity is delivered to your home, a percentage of electricity is lost along the way. Our power is delivered at 230V, and the current transmission loss factor (from 1 April 2022) for that is 1.036482.

When it comes to billing readings, there are two types: metered and loss adjusted. The former is cheaper – it means that you pay for whatever power is recorded by the meter; anything lost along the way is not your problem.

The latter factors in the loss, and adds that 1.036482 back in.

Total electricity bill = metered reading x transmission loss factor x electricity rate

Currently, most retailers absorb the transmission loss factor (TLF) to stay competitive, but this can change anytime so double-check with your electricity retailer’s website or fact sheet before you sign the contract.

5. Carbon tax – $0.60 to $0.80 monthly

The Carbon Pricing Act (CPA) came into effect 1 Jan 2019, so we’ve all been subject to a carbon tax.

For power-generating companies (direct emitters of greenhouse gases), the tax is $5 for every tonne of emissions until 2023. From 2024 onwards, carbon tax rate will increase exponentially up to $25 per tonne, $45 per tonne (2026 and 2027), and $50-$80 per tonne by 2030.

Some power plants (and the retailers they work with) may pass this cost to consumers. That’s part of what the U-Save vouchers are for.

Here’s how it’s calculated for consumers:

carbon tax charge = electricity consumed* x GEF-OM** x carbon tax rate

*The electricity consumed is your metered consumption.
**The GEF-OM is the Grid Emission Factor-Average Operating Margin set by EMA.

For a typical 4- to 5-room HDB flat, the carbon tax should be around $0.60 to $0.80 monthly.

6. Paper bill fee: $2+ monthly

Man, these electricity retailers sure are milking this green electricity narrative and era of eco-consciousness and environmentalism for all it’s worth.

If you’re all about digital statements and mobile payments, this won’t affect you. But the older folks who prefer paper bills will have to pay for it.

It’s a nominal sum though (usually just $1 to $2+ per bill), and is to cover to printing and postage costs.

electricity price hidden costs

7. AMI meters: $40 installation fee

There are two types of electricity meters: one, a cumulative meter, and two, an Advanced Metering Infrastructure (AMI) metre.

The cumulative meter is the basic one most households use. To get readings, someone has to physically go down to your premises (typically once every two months).

Advanced meters are “smart” meters which measure readings every 30 mins. This is the best for kiasu consumers who want to be able to check their consumption real-time via the e-portals. (Great way to see if your rebellious children switched on all the TVs, laptops, and Nintendo Switch while you’re out at work.)

electricity price hidden costs
Taken from Geneco’s fact sheet.

Some electricity price plans will benefit from an advanced meter. For instance, Geneco used to have a plan called “Get Free Sundays” that offers free electricity every Sunday. If you had a smart AMI meter, your household’s actual Sunday electricity consumption can be logged so you can go ahead and save all your laundry and dishwashing for Sunday.

However, if you don’t have a smart AMI meter, the discount will be based on a national consumption estimate. Sure rugi.

But before you get suckered into upgrading your meter, the installation fee is $40 (excl GST). This is paid to SP Group because it’s an infrastructure thing.

8. Early termination charges – varies depending on electricity retailer

This goes without saying – if you break contract, you will be slapped with a hefty penalty. So, if your BTO has just MOP-ed and you’re ready to sell your BTO anytime, do not go into a new 24-month electricity plan contract.

Different retailers have different pricing mechanics for penalty fees. Some charge a fixed fine, others a variable amount.

Here are all the 9 electricity retailers’ early termination charges:

Electricity Retailer Early Termination Fee
Senoko $321 or $535
Geneco $10 to $75 per remaining month
Keppel Electric Days left x Average daily consumption x 30%
Pacific Light $160 to $2,000
Tuas Power $200
Sembcorp Power $10 to $200 x No. of remaining month
Union Power $60 to $1,020
Sunseap $15 to $80 per remaining month
Diamond Electric $0 or $32.10

 

9. U-Save GST vouchers – must be used to offset your SP bill first

Don’t panic – the U-Save GST voucher is a gahmen handout and nobody will take it from you.

This isn’t a hidden cost, but in case you’re wondering why your vouchers weren’t used to offset your electricity bill, please be reminded that all U-Save GST vouchers must be used to offset your SP Group bills first.

If there is any excess after your water and gas bills, then it can be used to pay your electricity retailer.

Have you switched from SP Group to an electricity retailer? Share your experience with us in the comments below.