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Coffeeshop Chit Chat - Pegging of natural gas price to oil's...</TD><TD id=msgunetc noWrap align=right>
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</NOBR> </TD><TD class=msgDate noWrap align=right width="30%">Oct-6 11:17 pm </TD></TR><TR class=msghead><TD class=msgT noWrap align=right width="1%" height=20>To: </TD><TD class=msgTname noWrap width="68%">ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 3) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft width="1%" rowSpan=4> </TD><TD class=wintiny noWrap align=right>837.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>ELECTRICITY PRICING
</TD></TR><TR><TD><!-- headline one : start --></TD></TR><TR><TD>Make it fairer, more transparent
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD><!-- show image if available --></TD></TR></TBODY></TABLE>
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I REFER to last Saturday's letter, 'EMA explains spike'.
To the question on why, even though 80 per cent of our electricity is powered by natural gas, electricity prices are pegged to oil prices, the Energy Market Authority (EMA) replied that, because there is no Asian benchmark for gas prices, oil prices are used instead. In other words, it is not the actual cost of raw material (gas) that is used in computing electricity prices.
Surely the power generation companies know exactly how much they pay for natural gas. Is it not possible to determine electricity prices more accurately, rather than stick to 'this is what we have been doing all along since 2004, so we will continue to do it'?
Another issue this price increase has brought up is transparency. I was unable to find anywhere the formula to determine these prices. Perhaps the power companies should be required to publish their raw material prices, overheads and margins on their websites, so the public are kept up to date.
With privatisation of electricity, is there still a need for a 'one price for all' approach? Let the power companies figure out how best to obtain the lowest-priced raw material (using spot, one-month or three-month futures, or private agreements with gas producers) and reflect it immediately in monthly bills. This will allow competition to increase efficiency. EMA should play the role of moderator to ensure there is no cheating or collusion.
Like most Singaporeans, I am not asking for subsidies for utilities. I am just asking for fair and transparent pricing.
Wong Weng Fai
[email protected]
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</TD></TR><TR><TD><!-- headline one : start --></TD></TR><TR><TD>Make it fairer, more transparent
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD><!-- show image if available --></TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
I REFER to last Saturday's letter, 'EMA explains spike'.
To the question on why, even though 80 per cent of our electricity is powered by natural gas, electricity prices are pegged to oil prices, the Energy Market Authority (EMA) replied that, because there is no Asian benchmark for gas prices, oil prices are used instead. In other words, it is not the actual cost of raw material (gas) that is used in computing electricity prices.
Surely the power generation companies know exactly how much they pay for natural gas. Is it not possible to determine electricity prices more accurately, rather than stick to 'this is what we have been doing all along since 2004, so we will continue to do it'?
Another issue this price increase has brought up is transparency. I was unable to find anywhere the formula to determine these prices. Perhaps the power companies should be required to publish their raw material prices, overheads and margins on their websites, so the public are kept up to date.
With privatisation of electricity, is there still a need for a 'one price for all' approach? Let the power companies figure out how best to obtain the lowest-priced raw material (using spot, one-month or three-month futures, or private agreements with gas producers) and reflect it immediately in monthly bills. This will allow competition to increase efficiency. EMA should play the role of moderator to ensure there is no cheating or collusion.
Like most Singaporeans, I am not asking for subsidies for utilities. I am just asking for fair and transparent pricing.
Wong Weng Fai
[email protected]
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