Singapore electricity tariffs to rise 5% in Jan-Mar 2024 due to increased carbon tax

SINGAPORE: Singaporeans are set to experience a significant rise in utility costs in the coming months due to a confluence of tax increases and escalating energy expenses.

From 1 January to 31 March 2024, electricity tariffs for households supplied by SP Group will see a 5% hike, reaching 32.58 cents per kilowatt-hour (kWh) after the Goods and Services Tax (GST).

This increase from the current rate of 31 cents is partly attributed to a forthcoming rise in carbon tax, from S$5 to S$25 per tonne of emissions, aimed at steering the nation towards a low-carbon economy.

City Energy, the provider of piped gas, announced a 4% rise in town gas tariffs, now costing 25.23 cents per kWh after GST, compared to the previous 24.21 cents. This change reflects the broader trend of rising energy costs and is expected to affect numerous households.

However, consumers on standard fixed price plans with electricity retailers will not encounter changes in their tariffs until contract renewal, as noted by the Energy Market Authority (EMA).

The EMA also revealed that the average gas price used for calculating electricity tariffs has risen compared to the previous quarter, indicating broader market trends influencing the price surge.

Further compounding the financial pressure on residents, the GST is slated to increase from 8% to 9% in 2024. Additionally, water costs are projected to rise, with a planned increment of 50 cents per cubic meter over the next two years.

In response to the anticipated financial strain, the government has announced that eligible Singaporean HDB households will receive an additional S$20 per quarter in U-Save rebates from January 2024 to December 2025.

This initiative, totalling an S$80 annual increase, is intended to mitigate the impact of the escalating carbon tax and water prices.

This series of hikes comes as Singapore intensifies its efforts to transition to a low-carbon economy. The increased carbon tax is touted as part of a broader strategy to reduce carbon-intensive consumption and production, promote accountability for emissions, and encourage the development of low-carbon solutions.