Why 21% increase in electricity tariff?

a vacant land for now

In yesterday's ST, Ms Jenny Teo, Director of Corporate Communications of Energy Market Authority (EMA) tried to explain the massive increase in tariff for Oct/Nov/Dec quarter.

Allow me to summarise her response first.

The tariff is set quarterly in advance against the prevailing fuel oil price.

Why pegged against fuel oil price when 80% of electricity produced is generated using natural gas? Answer - While the gas supply has been secured with long term contracts but its price floats with fuel oil price as per market practice. [Given the massive tariff fluctuation, should EMA consider alternative arrangements? Or the whole Singapore should continue to subject itself to these shocks?]

She said oil price went up sharply in July. [I am sure it did. But what I am not sure is the magnitude of how that affect the tariff by SO MUCH.]

Ms Teo said it has nothing to do with F1 on its electricity consumption.

Ms Teo also said the increase in tariff is also not linked to the privatisation of the electricity industry. She said the privatisation process should be in consumers' interest.

My views
Firsly, as an accountant, I will be convinced when I see the costing figures. Of course, Ms Teo will not share that info with the whole Singapore.

An investor must justify the billions of dollars paid for the power plant investments with an appropriate yield. So how did the seller justify the yield to prospective investors?

Secondly, I am still not convinced with the existing public-listed public transport companies being regulated by Public Transport Council (or something like that). For so many years, the management of these companies have to play between profit maximisation and fulfilling their respective public role.

We have now created another situation of selling our power generation companies to private companies and the existence of Energy Market Authority.