Written reply to PQ on Marginal Cost of Producing Electricity Compared to USEP

Question

Mr Chua Kheng Wee Louis: To ask the Minister for Trade and Industry what is the current and year-to-date short-run marginal cost and long-run marginal cost of producing electricity as compared to the Uniform Singapore Electricity Price.

Written Answer by Minister for Trade and Industry Gan Kim Yong

1. The short-run marginal cost (SRMC) and long-run marginal cost (LMRC) have averaged at $157/MWh and $202/MWh respectively for the period from January to October 2022. The SRMC reflects the variable costs including fuel while the LRMC reflects both the fixed costs and the variable costs.

2. The Uniform Singapore Energy Price (USEP) is the wholesale price of electricity determined in the Singapore Wholesale Electricity Market (SWEM). The USEP fluctuates every half-hour and is determined by various factors. Besides fuel costs, which have surged over the past year due to the ongoing global energy crisis, the USEP is also influenced by prevailing demand and supply conditions which may fluctuate significantly within the day. It is not meaningful to compare the USEP to the regulated tariff, which is served by long-term gas supply with fuel costs indexed to oil prices.  Between January and October this year, the USEP has averaged at around $300/MWh, which reflects the higher fuel costs and prevailing demand and supply conditions.

3. The vast majority of consumers do not buy electricity in the wholesale market at the USEP. Consumers who prefer greater price certainty can consider buying electricity from a retailer in the Open Electricity Market, or in the case of households and smaller consumers, at the regulated tariff from SP Group.