$1 billion profit, so electricity tariffs raised 22%

SP Services has announced that it has raised electricity tariffs 21.89% from 1 Oct to 31 Dec 2008. The Online Citizen’s Leong Sze Hian has pointed out that SP Services’ parent company, Singapore Power Ltd, made a profit of $1.086 billion in 2007. I checked out their website and indeed this is true.

They made over $1 billion in PROFITS and they are increasing tariffs by 22%! And all this when oil prices are actually decreasing.

Of course, since it is not useful for our power companies to use the current oil prices to justify the increase, they are using the “forward fuel oil price”. This is the price agreed between the buyer and the seller for delivery of the oil at a specified future date, in this case 3 months.

As with the Public Transport Council (PTC) and ministerial salaries, the Energy Market Authority (EMA) is using this ridiculous formula to justify price increases.

It’s really shocking how the EMA has gone to the hilt to defend the price increases of the company they are supposed to regulate. But on closer examination, it’s not all that surprising:

– Singapore Power made $1 billion in 2007, much of it from Singaporeans’ electricity fees.

– SP is in turn 100% owned by Temasek Holdings (as are the two other power companies, PowerSeraya and Senoko Power).

– Temasek Holdings is owned by the Ministry of Finance.

– EMA, the energy market regulator, is a statutory board under the Ministry of Trade and Industry (as is the Competition Commission of Singapore, which is supposed to prevent cartel-like behaviour).

I think everyone is having a jolly good back scratch, except us ordinary citizens.

Something is seriously amiss when a power company can make $1 billion in profits and still raise charges by 22%. It is a classic example of the profit-driven culture that our government is run on. I really don’t know how much longer Singaporeans are going to stand for this kind of nonsense.