Household electricity tariffs to rise by 7%

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HOUSEHOLDS and businesses here will have to pay about 7 per cent more for
electricity in the coming July-September quarter, as higher fuel oil prices
spark tariff increases.

The household tariff will rise 6.93 per cent or
1.25 cents per kilowatt/hour (kWh) to 19.28 cents per kWh, SP Services said
yesterday. The average tariff increase across all customer categories is 7.15
per cent, it added.

The increase is 'largely due to higher fuel oil
prices', the Singapore Power (SP) subsidiary said. 'The average fuel oil price
over the past three months has increased to $76.24 per barrel, significantly
higher than the $60.47 per barrel fuel oil price used to set the tariff
previously.'

SP also said the Q3 tariff rise has been mitigated by a
reduction in the market support services fee to 0.22 of a cent per kWh, from
0.28 of a cent, due to productivity improvements and cost reductions by SP
Services.

Under the recently revised tariff formula, the Q3 tariff was
calculated on the average fuel oil price from April to June.

Fuel oil
prices have been rising with crude oil prices which recently hit a seven-month
high of US$70-plus a barrel, sparked by signs of a global economic
recovery.

An analyst with the Energy Studies Institute had warned of
higher Q3 electricity tariffs, saying spot fuel oil prices had risen from an
average of US$39 a barrel in Q1 to US$45-plus by April and US$50-plus by
end-May.

The higher tariffs also follow an uptick in electricity demand
that began to emerge in March and April.

'Demand has definitely been
coming up over the past three months, although April and May are the seasonal
high periods due to higher temperatures,' Energy Market Company CEO Dave
Carlson said earlier this month.

This month's heatwave suggests June
electricity demand also remained high.

Reflecting so-called 'green
shoots', a Barclays report yesterday said Singapore's economy will probably
grow at the fastest pace in almost six years in Q2, helped by a recovery in
China and other Asian markets.

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