Singapore’s gas and electricity prices have risen due to the impact of higher carbon tax, goods and services tax (GST) increments, and rising energy costs.
From Jan 1 to March 31, household electricity tariffs supplied by SP Group increased by 5% to 32.58 cents per kWh after GST.
After GST, town gas tariffs also increased by about 4%, according to City Energy, the producer and retailer of piped gas.
Consumers who have standard fixed price plans with electricity retailers will not see change in electricity tariffs until they renew contracts, said the Energy Market Authority (EMA) on Dec 29 last year.
Starting in 2024, the GST increased to 9%, and the carbon tax rose to $25 per ton of emissions.
EMA’s spokesman said, “The carbon tax is part of a suite of measures to support Singapore’s transition to a low-carbon economy, by steering consumers and producers away from carbon-intensive goods and services, holding businesses accountable for their emissions, and enhancing the business case for the development of low-carbon solutions.”
Power generation companies levied the carbon tax are expected to pass on a portion of the costs to electricity retailers like SP Group, which could subsequently pass on these additional costs to customers.
The National Climate Change Secretariat had in December predict that the carbon tax hike would bring about a $4 increase in monthly household utility bills for a four-room Housing Board, assuming that the full cost is passed on to consumers.
Additionally, EMA noted that approximately 95% of Singapore’s electricity comes from imported natural gas, which means the country cannot be completely insulated from developments in the global energy market.
“As we continue in our energy transition, natural gas, which is the cleanest form of fossil fuel, is expected to remain the dominant fuel in the medium term,” said EMA.
Natural gas will remain the city-state’s primary source of energy for the next decade, accounting for more than 50% of its energy mix by 2035, even as the country turns to cleaner technology to decarbonize the energy sector.
Approximately 95% of Singapore’s electricity comes from imported natural gas. (Photo: Singapore LNG Corporation)
From 2024 to 2025, eligible Singaporean HDB households will receive an additional $20 per quarter in U-Save rebates, $80 a year in total, to cushion the impact of the rise in carbon tax and water prices in 2024 and 2025.
U-Save rebates are part of GST Voucher scheme, which provides lower- and middle-income HDB households with quarterly rebates of $220 to $380 to offset utility bills.
David Broadstock, senior researcher at the National University of Singapore, pointed out that the electricity tariff rate that consumers pay after GST will be the highest since 2008, which was 32.64 cents per kWh at the time.
“At a time when international gas prices have been fairly stable and domestic power markets have considerably lower price volatility than in recent years, we can attribute most of the price revision to the rising carbon tax,” he said.
While he expects that most electricity generation companies will pass on the burden of carbon tax, the rising costs from the carbon tax could also encourage innovation among companies. For instance, they might explore ways to cut the carbon content in the fuel they use.