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 rate (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.
9 hidden costs of electricity in Singapore
For your convenience, here are 9 hidden costs that will affect your electricity bill.
Note: To prevent any unwanted surprises on your bill, you should still read your contract carefully before signing up for any package. This is just a guide for hidden costs to look out for.
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, iSwitch charges a $4.95 (excl GST) service charge. Here’s what it says on the website:
… 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 fine print 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, we all 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 that.
The security deposit varies from retailer to retailer, and it depends on the size of your home or your typical 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.
For example, here’s how much Sembcorp charges:
Security deposit sums 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 bill is $65, your security deposit will be no more than $130.
Not all retailers require security deposits though. Geneco and Senoko, for example, currently waive 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”. Here’s a screenshot from iSwitch’s contract:
… and Sembcorp’s :
Thankfully, it’s not reeeeeally “automatically” renewed. There are some regulations in place to hinder opportunistic attempts to kutuk 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.
It may be rat race of super low rates and crazy promotions now, but what many of us don’t realise is that it’s mostly for new customers. 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.
If not, your new discount is likely to be extremely disappointing – in the above cases, just 5% off the regulated tariff.
4. Transmission loss factor – 1.031651
When electricity is delivered to your home, a percentage is lost. Our power is delivered at 230V, and the transmission loss factor for that is 1.031651.
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 1.031651 back in.
Total electricity bill = metered reading x transmission loss factor x electricity rate
Currently, most retailers absorb the TLF to stay competitive, but this can change anytime so double-check with your retailer before you sign the contract.
5. Carbon tax – $0.60 to $0.80 monthly
The Carbon Pricing Act (CPA) is effective 1 Jan 2019, so from this year onwards, we’re all subject to a carbon tax.
For power-generating companies (direct emitters of greenhouse gases), the tax is $5 for every tonne of emissions. The thing is, although incentivised, local power plants have limited options to reduce emissions.
Some power plants (and the retailers they work with) 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 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 era of eco-consciousness 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.
7. Advanced meters (AMI meters) – $40 installation fee
There are two types of electricity meters – the cumulative meter, and the advanced one.
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 half an hour. This is the best for kiasu consumers who want to be able to check their consumption on the go, via the e-portals.
Some electricity price plans will benefit from an advanced meter. For instance, Geneco has a plan that offers free electricity every Sunday. If you have a smart meter, your actual Sunday 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 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. However, it’s worth mentioning because different retailers have different pricing mechanics for penalty fees. Some charge a fixed fine, others a variable amount.
Here’s an example of a fixed penalty from Geneco:
It comes up to just about 2 months of your monthly bill, which may be reasonable depending on how long you have left. The other mechanic is using a variable rate that is multiplied on the number of months you have left in your contract.
So if you live in a 5-room flat and have 6 months left to go, your early termination fee would be $30 x 6 = $180.
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.
Did you fall victim to any of these hidden charges? Share your experience with us in the comments below.
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