Electricity up: U-Save enough?

by Leong Sze Hian

I refer to the article “Get up to $190 worth of HDB utility rebates in 2011” (ST, Dec 31), and the reports “Govt to give out S$80m of Utilities-Save rebates in 2011” and “Electricity tariffs to go up next year” (Channel News Asia, Dec 30).

Electricity increase

Over the last three years, the domestic electricity tariff increased by 14 per cent, from 22.62 cents on 1 January 2008 to 25.79 cents on 1 January 2011.

Since “About 800,000 Singaporean HDB households can expect to receive about S$50m worth of Utilities-Save (U-Save) rebates in January 2011” and “The second tranche of S$30 million of rebates will be paid out in July 2011”, the average per household is about $100 ($80m divided by 800,000).

This is a far cry from “A Singaporean household may receive up to S$190 worth of U-Save rebates in 2011, depending on HDB flat type”.

Since the tariff will increase by 3.3 per cent this quarter, and “SP Services said families in four-room HDB flats will on average pay about S$3.15 more a month”, the average bill may be about $100.

The first article also cited the example of a three-room flat household having an average bill of $100.

U-Save enough

If the average monthly utility bill per household is $100, the 14 per cent increase in the electricity tariff means that the increase for this year alone is about $168. ($100 times 12 months times 14%).

So, how do the U-Save rebates “help Singaporeans, especially low and middle-income households, cope with the higher cost of living”?

In order to truly help Singaporeans cope with the higher cost of living, shouldn’t the rebates be enough to at least cover the increase in the tariff, since the “U-Save rebates are part of the S$4 billion GST Offset Package”, when GST was raised from 5 to 7 per cent in 2007?

More rebates good – here, there, everywhere?

Just like Medisave top-ups that never seem to be able to catch up with increasing medical costs, CPF housing grants that never catch up with HDB price increase, the U-Save rebates may also not catch up with rising electricity tariffs.

In order for subsidies to effectively help Singaporeans, they must offset price increases as well. Otherwise, it may just be akin to the left pocket getting more money than what the right pocket is giving out.

How many households will get rebates of not more than $120?

How many will get rebates that are enough to offset the tariff increase?

Without such statistics, how do we know whether the majority of households are better or worse off?

History lesson – How it all began

U-Save rebates were first given out in 1996 to help offset increasing electricity tariffs, and the highest amounts doled out were $226 and $200 million, in 2001 and 2008 respectively.

I could not find the electricity tariff in 1996. The oldest that I could find on Singapore Power’s web site was 1 August, 2000, at 17.66 cents.

So, if we take 2000 as a starting point, the tariff has increased by 46 per cent.

And, we are just giving $80 million of rebates?

In this connection, in the Singapore Budget Speech 1996, it was said that “Singapore Power’s electricity tariffs are too low, and that we must raise them gradually over several years, to enable SP to earn an adequate return on its capital ….. This is the real reason for raising SP’s tariffs. It is not to raise more money for the Government”.

Finally, have you ever wondered why Malaysia and Hong Kong’s electricity tariff at 21.8 to 33.4 sen (9 to 14 Singapore cents) and 12.30 US cents (16 Singapore cents) respectively, are so much lower than Singapore’s?

By the way, according to Singapore Power’s annual report financial highlights, underlying net profit after tax rose by 18 per cent, from $616 to $728 million, in its last financial year.

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