The regulated tariff comprises mainly two cost components: fuel cost and non-fuel cost.

Fuel Cost

This is calculated using the average of daily natural gas prices in the first two-and-a-half-month period in the preceding quarter. For example, the average natural gas price between April and June is used to set the tariff for July to September. This helps to smoothen out any large swings in the oil markets.

In Singapore, electricity is produced using mainly imported natural gas which is tied to oil prices by commercial contracts. This practice is similar to that practised in other markets in Asia for natural gas contracts.

Non-fuel Cost

This component reflects the cost of generating and delivering electricity to consumers. It includes the following cost components:

• Network Costs (paid to SP PowerAssets)

   

  This is to recover the cost of transporting electricity through the power grid.

   

• Market Support Services Fee (paid to SP Services)

   

  This is to recover the costs of billing and meter reading, data management, retail market systems as well as for market development initiatives.

   

• Market Administration and Power System Operation Fees (paid to Energy Market Company and Power System Operator respectively)

   

  These fees are to recover the costs of operating the power system and the wholesale electricity market.

   

• Power Generation Cost (paid to power generation companies)

   

  This covers mainly the costs of operating the power stations, such as manpower and maintenance costs as well as the capital costs of the stations.