Electricity price plans in Singapore climb by up to 11% as retailers hedge against rising costs amid Middle East war

Instead, retailers are likely cushioning against the increase in costs.

“No company wants to naturally increase their price by a large quantity because it’s just discouraging for customers. And that tells you it’s strategically important for them to do so,” he said.

For example, a 10 per cent increase in a two-year fixed-price contract indicates that the company believes it is going to cost about 10 per cent more on average, over those two years, in order to provide the electricity, he said.

On the removal of discounts from tariffs, Dr Broadstock said the increased cost uncertainty could make such contracts riskier.

The increase ahead of the next tariff adjustment in April is notable.

Experts previously said it typically takes three to four months for global energy price increases to be reflected in electricity prices, in line with the regulated tariff adjustment every quarter.

Retailers typically benchmark their rates against the tariff rate, charging just below it to attract customers, Dr Broadstock said.

“And so in normal times, when the market is just murmuring along, it’s not very obvious whether the tariff is going to go up a couple of percentage points or down a couple of percentage points. So retailers just don’t make many changes,” he said, adding that any changes are relatively small.

The current rates available are almost on par with the tariff rate of 29.11 cents/kWh, including GST.  

The quicker response is similar to conditions in 2022, where retailers responded to spot market conditions, Dr Broadstock said.

At the time, fossil fuel shortages triggered by Russia’s invasion of Ukraine sent electricity prices surging. A year before, six electricity retailers had exited the Singapore market within weeks amid global energy price spikes.

“What we are observing is that the retailers are confident they don’t need to wait to see what the tariff is going to do,” he said, noting that retailers have flexibility, unlike the regulated tariff.

The government has said electricity prices are expected to go up. On Mar 4, EMA warned that some consumers may see an increase in electricity prices at the point of retail contract renewal.

If fuel costs remain elevated, there would be higher regulated tariffs in subsequent quarters, EMA said then.