Help with electricity hikes on the way

Li Xueying, Straits Times 6 Oct 08;

MEASURES to help ease the impact of the 'rather large' hike in electricity tariffs could be introduced in next year's Budget.

Finance Minister Tharman Shanmugaratnam hinted at it yesterday during a dialogue with residents of Toa Payoh East.

He said: 'We know the large increase this quarter has unsettled many people. We will take that into consideration in next year's Budget when we decide on the U-Save (Utilities-Save) rebates and the total package solution for the economy.'

Electricity tariffs shot up 21 per cent last Wednesday - the biggest one-time increase in seven years.

Grassroots leader Rashid Hussein, 67, questioned the timing of the hike, given that oil prices had just gone down.

Mr Tharman acknowledged that it was 'sudden and surprising for most people'. But he placed it in context, saying that in the course of this year, the price of electricity had risen 'much less' than oil prices.

'If you take the year as a whole, you take the electricity tariffs this year compared to last year's, the increase is going to be 26 per cent,' he said.

In contrast, oil prices from January to September had gone up by 45 per cent, he noted. 'So the electricity increase has been reasonable, compared to the oil price increase.'

He reiterated the Government's stance on not subsidising oil prices, noting that the practice had proved problematic for countries in the region and for developed countries.

'When they try to subsidise, it either leads to shortage because the suppliers don't want to supply, or it leads to the government having a bigger and bigger bill on its budget and eventually taxpayers have to pay,' he said.

Instead, Singapore's approach is to set a realistic price based on the global market price, but help the poor through measures such as the U-Save rebates.

For instance, families in one or two-room HDB flats would have received rebates amounting to four to five months of their utilities bills, he said. 'People say the Government gives with one hand and takes with another,' he said to smiles. 'But the hand giving is much much bigger than the hand taking back.'

Mr Tharman also held out hope that electricity tariffs would go down, on the heels of lower oil prices. 'Many people have forgotten that last year, for six months, the tariffs went down, so it is not always going up.'

Power bills: More give than take
Today Online 6 Oct 08;

IN THE wake of a 21-per-cent hike in electricity tariffs for the rest of this year, could the low-income expect more help in next year’s Budget?

Finance Minister Tharman Shanmugaratnam acknowledged that the latest electricity hike is “rather large” and said the Government would consider that, as well as the cost of living and economic outlook “as a whole”, in deciding on Utilities-Save (U-Save) rebates and the “total package” next year.

One Toa Payoh East resident pointed out the coincidence in timing of the Oct 1 electricity price hikes and the Government’s second instalment of Growth Dividends.

To this, Mr Shanmugaratnam said it could appear to some like the Government was giving with one hand and taking back with the other. But he assured that the “giving” hand was much larger than the one taking back, citing how the U-Save rebates would more than cover electricityincreases for poorer households. For example, households living in three-room flats wouldreceive $310 in U-Save rebates this year, exceeding their average utilities bill increase of $223.

The U-Save rebates, which will be increased by 50 per cent next month, are part of the GST Offset Package and meant to help HDB households cope with higher costs of living.

Some Singaporeans have highlighted Singapore Power’s nett profit of $1.085 billion in this financial year and Power Seraya’s profits of $218 million, an increase of 30 per cent from the previous year.

Mr Shanmugaratnam said the right approach, though, is to allow local prices to reflect global prices.

“Help the poor directly, rather than subsidise oil prices,” he said. “Avoid a subsidy scheme, because every country has found out that you run into trouble, sooner or later, once you start subsidising oil prices.” NEO CHAI CHIN