HIGHER COST OF ELECTRICITY

HIGHER COST OF ELECTRICITY: 9.

Mdm Halimah Yacob asked the Minister for Trade and Industry (a) what measures are in place to assist Singaporeans cope with the higher cost of electricity; and (b) what would be the impact of rising electricity prices on companies.

Mr Iswaran (for the Minister for Trade and Industry): Mr Speaker, Sir, let me first place the recent hike in electricity prices in the context of global events. There is uncertainty in global energy markets due to factors such as the unrest in the Middle East and North Africa, and the Fukushima incident. This has caused fuel oil prices and, consequently, our electricity prices to rise.

Our approach has always been to price energy right. This ensures that consumers understand the true cost of energy, make efficient use of a scarce and precious resource, and avoid the wasteful consumption associated with subsidies. Nonetheless, the impact of global fuel price increases on our electricity tariffs has been mitigated in several ways. An appreciating Singapore dollar has helped to cushion the effects of rising fuel oil prices, which are denominated in US dollars. Since the beginning of 2010, the Singapore dollar has appreciated by about 8% against the US dollar. Without this, the electricity tariff in the second quarter of this year would have been 5% higher. Also, the introduction of competition into our electricity market since 2001 has improved efficiency. Power generation companies have switched from oil-fired steam plants to more cost efficient ways of generating electricity, such as gas-fired combined cycle gas turbines (CCGT). Had we continued to use steam plants, the electricity tariff today would be about 15% higher, reflecting the relative efficiency of the CCGT.

While these measures have helped, they cannot fully offset the effects of oil price increases on our electricity tariffs. To help households which may face difficulties in coping with the rising cost of energy, the Government has provided targeted assistance. This year, about $250 million in utilities rebates will be given to help Singaporeans. Three-room households will receive $340 in rebates; this is equivalent to the cost of about five months of electricity consumption by such households. Four-room households will receive $320, which will cover about three and a half months of their electricity bills, assuming there is no change in their consumption behaviour. Put another way, 3-room households will receive rebates this year which are worth about five and a half times the overall increase in their electricity bills over the past 12 months. In other words, if you look back over the increase in their bills over the last 12 months and you compare that with the rebates in this year, the factor is more than five times. Households will receive the next tranche of utilities rebates this month. Since 2007, the Government has provided close to $800 million of such rebates, for the benefit of 800,000 households. So, by all measures, the assistance rendered has been substantial.

We also recognise that increases in our electricity tariff may affect the competitiveness of our businesses. As our electricity prices reflect global factors, our principal approach is to help companies manage their demand. The Government administers several programmes to promote more efficient energy use among companies. The Energy Efficiency Programme Office (E2PO), which is a multi-agency committee led by National Environment Agency (NEA) and Energy Market Authority (EMA), co-ordinates various programmes to raise awareness of energy management and energy efficient technologies, provide support for companies which are trying to adopt such technologies, train energy management professionals, and encourage sharing of best practices in energy efficiency among companies.

Mr Speaker, Sir, adopting energy efficiency practices helps companies cope with the rising energy prices in the short term, but also prepares them for a future that will increasingly be energy constrained.

Mdm Halimah Yacob: Mr Speaker, Sir, I am really happy to hear about the immense investment in helping households cope with the rising cost of energy. There will continue to be households that, despite these assistance measures, will face difficulty in paying for their electricity bills. Sir, I would like to urge the Government to make sure that Singapore Power work with these families to give them time to pay off their arrears – some of them may have chalked up a lot of arrears – so that their electricity supply will not be disrupted.

Mr Iswaran: Mr Speaker, Sir, I thank the Member for her supplementary question. I understand her sentiments and fully empathise with them. I think as Members are well aware, there are instances of families who, even after all the assistance that I have described have been rendered, still have difficulties and in those instances, SP Services, at the behest of or appeal by the Member of Parliament, has considered cases on an individual basis to see what kind of help can be rendered. That will continue to be the case, in addition to other assistance that is available through the ComCare schemes.

Ms Irene Ng Phek Hoong (Tampines): Sir, the global situation is very uncertain with the conflicts in North Africa, the Middle East and the disasters in Japan. Can I ask for an assurance from the Senior Minister of State that the Government will stand ready to take any extra measures, if necessary, should the situation worsen and the cost of electricity and other inflationary pressures should rise and impact Singaporeans, so that Singaporeans can be protected from the ill effects of these conflicts?

Mr Iswaran: Mr Speaker, Sir, the Minister for Trade and Industry has already described the proactive stance we are taking with respect to inflation and its impact on our population. Specifically on energy, we continue to be vigilant. We are tracking the trends to see what kind of impact it can have. Certainly, as the track record of the Government suggests, as and when there is a need, appropriate steps would be taken to mitigate the impact on those households that need the help.