Monday 18 October 2021

SP Wholesale versus Electricity Retailers


I noticed some Singaporeans are quite pissed off with the increased in electricity tariff for households by a "mere" 3.1% for October to December period.


I mean for a HDB 4 room flat, the average monthly electricity bill will increase by $2.49 before GST. 

That's if you are one of those who have not switch to any of those OEM Electricity Retailers, still happily on the SP Group default regulated tariff plan. Those who laughed at you for not switching are not laughing now... Are they?

To be precise, these pissed off Singaporeans are very "buay song" their chosen Electricity Retailers are no longer giving them the generous 20-30% discounts they used to enjoy.

I mean if you are not in sales, don't have profit and loss responsibility in your day job, you got excuse.

Then again, you mean you have already forgotten what happened with Grab and Uber? 

What about those generous "carrots" that banks and credit card companies dangled in front of you, but after a few years, they'll give you a bigger hamster wheel to run on, or else the carrot incentives will be taken away... 

So fast forget?

You really believed the 20-30% discounts from OEM Electricity Retailers will be forever and ever? You didn't anticipate the spread between Standard Regulated Tariff Rate and Non Standard Rates will narrow over time?  

If you're an investor or trader, I'll be betting you'll be more drawn towards Technical Analysis. Wink.

Before I go on, I believe MOST of you will not be affected by the price increase of electricity FOR NOW.

Steady lah. Don't anyhow panic for nothing just from reading headlines.

Firstly, if you are still on the SP Group's default Standard Regulated Tariff plan, the impact is non-event.

Secondly, if you already have switch to any OEM Electricity Retailers, you are only affected if you are RENEWING your electricity plans within these 3 months from October to December.

Unless you were one of those "unlucky" customers who chose the "wrong" electricity retailers that decided to throw in the towel... Now feeling very jilted and abandoned...

Can anyone spot the biggest difference between those electricity retailers that are still thriving and those who cannot make it? (You may want to reflect if you always thought you're a fundamental investor)

Want to know why LUCK is better than skill?

During May 2021, I blur, blur, no goals, no plans, just renewed my Tuas Power PowerFix plan for another 24 months.

The price locked 4 months ago was - $16.80 cents per kWh with GST. 

Today if I were to renew the same PowerFix plan for 24 months, it would cost me - $25.68!!!

Crazy right?

Not so crazy if you knew during April 2020 last year, WTI Crude futures went negative!? And today one year later, WTI futures is now above USD$80!!! Now that's what I call a reversal!

So what's next year's energy price? Your guess would be as good as mine!

For the majority of us who have locked-in a much lower price till next year or two, don't be complacent.

Use the extra time to prepare in advance what would you do if oil prices were to revert back down to mean. What to do if prices go higher and higher and breaks USD$100? 

If you think oil prices will go lower going forward, would switching from a fixed price plan to a guaranteed percentage discount variable plan be better?

Then again if prices were to go higher, of course remaining on a fixed price plan would make better sense. You should be asking whether to lock the price for 6 months, 12 months, or 24 months? It all depends on the level of conviction for your thesis, doesn't it?

OK, there's a reason I've left the trickiest one till the last - SP Wholesale Electricity Price (WEP).

On paper, its the "cheapest".

If you believed in the Market Efficiency thesis, why isn't this plan the most popular???

I'll let you figure it out for yourself.

But I can help you along with some poking questions:

If big daddy were to liberalise the electricity market today, would it succeed?  

Would you make the switch for a mere 3% discount from standard regulated tariff?

So was big daddy lucky like me? Or did they spot an opportunity 3 years ago, and quickly acted upon it? 

I would humbly suggest you can consider WEP if you are NOT one of those who were genuinely surprised that HDB flats will go to zero after 99 years. 

If your england is so poor you don't understand what a lease meant, you're probably the type of customers that SP Group want to avoid having. Hence the reason why SP Group not pushing WEP so hard in the market.

They probably don't want the CPFIS scenario where customers go to Hong Lim Park complaining why offer the WEP option to me when I can ownself hurt my ownself!? 

Want to bet that even if OEM were to be introduced today and not 3 years ago, there will be customers who will still switch? Even if the discount is a mere 3%...

Those who voluntary contribute to CPF would do it! (3% not much different from 2.5 or 4%)

These are people who value certainty. And 3% saved, compounded by 30 years, these happy souls would probably giggle in their sleep! 

WEP would be ideal for those who are already into selling naked options for the "passive income".  Its fun collecting the premiums month after month, especially when most options expire worthless. That's until...

Similarly, WEP would appeal to REIT yield hogs gleefully collecting their dividends year after year. That's provided the REIT massacre don't happen again like in 2009. A more recent example is Eagle Hospitality Trust. And I guess most Singaporean yield hogs will never touch Shipping Trusts ever again, never mind their juicy yields were much higher than REITs!

If a 50% increase in electricity bills can get you all knotted up, would you go ballistic if your electricity bill were to spike up by 2 times, 3 times, 7 times?

OK, one year's data from SP Group is too short.

New Zealand has decades more experience with Wholesale Electricity Market. Try this:

Spiking Electricity Prices A Shock To The System

Figure out why those customers not on "spot contracts" were better "insulated".

And why WEP not popular due to "high market risks" according to insiders:

Switch and Save


I know. 

Who wants to do their own due diligence. What? Do my own reading and research?


Come to think of it...

Why study when we can just copy the homework from our classmates?


  1. I switched to Keppel Electric to support Keppel Group as 20 yrs royal shareholder. LOL!

    1. CW,

      Of course! Buy what you know :)

      Imagine Keppel Electric were to fold and say they don't play liao...

      Not when Keppel Electric had 21 years of experience powering Singapore's electric grid ;)

      There was a time when we had a lot of technicoloured taxi companies too.

      In the end, how many survived?

      Imagine if these relatively unknown taxi companies were "listed companies" available to CPFIS "investors" to invest in...

      After Singtel, never again!

  2. SMOL,

    Congratulations on picking the bottom in the electricity market with your Tuas Power PowerFix plan. That was a good trade!

    Electricity wholesale plan is fine for people like me who are used to taking losses in the volatile stock market.

    While fluctuating prices may not be comfortable to many Singaporeans, it will be good for Singapore to have more households on the Wholesale plan. Singaporeans on wholesale plan will try their best to conserve electricity when the country is in an electricity supply crisis. There is no incentive for people who are on a fixed price plan to help the country conserve electricity since their wallets are not hit by a supply crisis.

    Influencing people's behavior with free market prices is probably the most effective cure for supply-side problems.

    1. hyom,

      That's pure dumb luck lah!

      I was a bit miffed Queenstown was one of the last areas to be rolled-out for the OEM - it only reached us 1st May 2019.

      Meaning those lucky residents in Jurong had one year head start from 1st April 2018 for the 20-30% discounts over regulated tariff rates.

      The only discretionary credit I can claim is choosing 24 months over 12 months; fixed over variable price plan :)

      The Wholesale plan could be "suitable" for advanced or veteran investors like you. Its similar to the very profitable shorting volatility trade in US over the past years ;)

      However, I'm not sure a casual reader or "L plate" retail investor can fully appreciate the pain and damage a volatility spike can do to their mental state of mind...

      Especially if the trading and investing analogies I gave flew over their heads! (There's a reason why I quoting them)

      Well, now we know which Electricity Retailers got blown out of the water precisely due to a volatility spike - hence their capitulations.

      I could be wrong. I don't think most Singaporeans believe they can do a better job than these "failed" Electricity Retailers...

      Choy! You don't spoil market!

      Wait big daddy remove all Fixed Price Plans, and we only get to choose between different Variable Price Plans :(

      If that happens, I tell everyone its you and your XX mouth!

  3. Smol,

    Am paying a bit below 16 cents (managed to catch the Covid low in Q3 2020) ... BUT ending in Q3 next year :O LOL

    For those interested in S'pore's spot electricity pricing (we call it USEP), here's the real-time website ... just hit F5 to refresh. Right now it's roughly 32 cents per kwh.

    Yesterday mid-afternoon it was showing 150-170 cents per kwh. News reported it hit a high of over 300 cents/kwh a week or so ago. (If only my stocks jumped as much LOL)

    As for Brent price (which SG electricity pricing is mainly based on), can monitor the futures as a guide. Currently showing $78.50 for Oct 2022 (take it with a bucket of salt as it will be dynamic).

    Gut feel is high chance for WTI (let alone Brent) to hit $100 early next year. I've been hedging with commodity & natural gas ETFs. Just closed out the natgas one for a good profit. These are NOT for buy-and-hold LOL.

    Some early -ve divergences on commodity ETFs ... maybe a bit of short-term pullback & some relief for inflation sufferers.

    The next unpleasantness will be food inflation, like in 2011/2012. Get ready for more expensive cai png. Hohoho!

    1. Spur,


      All of sudden, those that did not switch and stayed with the SP's regulated tariff rate at 25.80 cents are looking very chill ;)

      300 cents!!!???

      And I thought the 160 cents volatility spike in 2019 was "rare"...

      There's one young blogger that recommended WEP and was very "male-chicken" sure WEP prices cannot EXCEED the regulated tariff price.

      That's the power of youth! (I'm not poking him; that's how we all learn through crash got sound)

      From the comments at his post, you can see the "awkwardness" when readers who followed his advice pointed out their WEP electricity bills CAN exceeded those from Electricity Retailers...

      And of course those on WEP today are probably paying more than the regulated tariff rates :(

      But I guess no worries as high oil prices are "transitory"... The Fed says so!

      Then again, big daddy has another opinion. Early this month, MAS has decided to slope the S$NEER from flat to slightly higher.

      In plain England, its to allow Sing Dollar to appreciate higher to combat imported inflation. (Transitory my ass! I guess they must be thinking. LOL!)

      Tonight the Proshares Bitcoin ETF will launch. Just like your Nat Gas ETF, retail investors will learn the crash got sound way this Bitcon ETF is for trading; not buy-and-hold ;)

      That's when they discover the death by thousand cuts effect of contango!

      Thanks for chiming in! Talking shop is so much fun!

    2. Yup, those dealing with derivatives as their underlying should be more accurately called ETNs rather than etfs.

      I suspect the bitcoin etf hoo-ha will be a sell the news event, at least in the near term.

      Talk about timing ... if only energy prices 3-4 yrs ago were like today's, hyflux would probably be entering the STI. Retirees holding its stocks & perps would look like investing geniuses.

    3. Spur,

      Yup, and our Singaporean oil trader prodigy Hin Leong would still be around...

      With current shipping rates, big daddy may not have to sell NOL or would have gotten a much better selling price!

      That's market timing and volatility for you and me!!!

      Events in recent years have been most humbling...

      Many scenarios traditional textbooks say should never happen, have happened:

      1. Negative interest rates (imagine CPF charging us for voluntary contributions!?)

      2. Negative futures price for WTI (like petrol stations paying car owners to take petrol from them???)

      Now I dare not be "male-chicken" sure about anything...

      Talking about ETFs and ETNs, the unfortunate thing is newbie retail investors are treating them like "securities".

      I still remember the crash got sound learnings we had with Synthetic and Physical STI ETFs during the early days ;)

      The Earn More path is like playing the Squid Game.

      Just like those Electricity Retailers that threw in the towel - at least they know when to cut-loss; unlike Hyflux or Hin Loeng - we too have to decide to continue playing, or get out to the Save More path...

  4. In Texas, there was a wholesale energy provider.

    During most part of the year, the wholesale electricity prices are around 20 cents per kwh.

    But, every year during summer, prices spiked during summer cos everyone turned on the aircon.
    Feb 2021, prices spiked cos of that few days where it snowed in Texas.

    And during these periods, the cost of electricity would go up to $9 per kwh (regulated max limit), maybe for a few hours within the day when there is peak usage.
    The typical angmoh house, cos they stay in landed property, they use maybe 500-1000 kw per month. Some people got $400-$1000 bill just for a week during those spike periods.

    End up they company got sued for misleading advertising.

    Well... like picking up pennies in front of the steam roller. Most of the days electricity prices are nice and cheap.
    But on the days when it really matters, like when it's damn hot or damn cold. When everyone wants electricity, that's when it hurts the most.

    1. ERSG,


      I'm glad you shared your Texas experience ;)

      Most Singaporeans are "bei kambings" when it comes to deciding either buying electricity wholesale from SP Group or from the many Electricity Retailers out there...

      To be fair, there's a reason why SP Group did not make a song and dance or oversell SP Wholesale to the average consumers riding the ComfortDelgro bus.

      Then again, when those of us in the community who should know better, but are just as clueless, what more to say?

      Maybe they are Technical Analysis people? (Must give chance!)


      Classic yield hog behaviour - see stocks that have the HIGHEST dividend yield, bite!

      They never pause and ask, "With these juicy yields at 8%-9%, why are other investors not biting and instead choosing those that have "pathetic" 4%-5% yields?

      The same for those who went for junk or perpetual bonds, but forgot there's a reason why the coupon rates are higher than rated corporate bonds or big daddy's SG retail bonds...

      Oh well...

      Crash got sound!

  5. Side note:
    What happened to energy prices recently? I catch no ball. I left SG around the time when the xmm were hanging around coffee shops asking people if they wanted to sign some power contract.

    Since I was leaving, I just left it as whatever the default is.

    From what you wrote, I'm inferring that.
    1) There is the default (which is where I am)
    This group should be not significantly impacted.

    2) There is a wholesale rate, customers pay floating rates+ some tax?
    These folks kenna quite jialat cos they have to absorb higher electricity prices since they have to take floating rates.

    3) There is a lock in rate with OEM, customers pay a fixed rate per kwh for a number of months, but with a required minimum usage every month?
    This group, if you lock in a low price for a long period, these folks happy, cos prices are fixed for them.
    Unless they signed with a company that couldn't survive. Which means they go back to default SP rates in (1) which isn't all that bad.

    But if their contracts ending soon and need to renew, then they have to sign a new contract with a higher fixed rate?
    Alternatively, they could just go back to the default SP customers mentioned in (1).

    So it's mainly the (2) that are most heavily impacted?

    1. ERSG,

      There's only a minimal impact for those who remained on the DEFAULT plan like you.

      Mercifully, I believed only a minority are on the SP Wholesale plan. If not, we would have heard from them complaining at Hong Lim Park already!

      Majority of us who have switched to Electricity Retailers have locked-on to much lower electricity prices for the next 1 to 2 years. We are still good. Its pure dumb luck though. LOL!

      Two small groups of Singaporean consumers are probably quite pissed off.

      1) Those who woke up and found they have to renew their electricity plans from Oct to Dec this year.

      That's because the "generous" 20%-30% discounts they enjoyed for the past 2-3 years are no longer available.

      The latest plans from those surviving Electricity retailers now only give 3%-5% discounts from the default Standard Tariff rates :(

      2) Then there's those consumers who selected those relatively "unknown" and smaller Electricity Retailers.

      Even if they have locked-on to much lower prices earlier, its for naught as their Electricity Retailers have decided to throw in the towel.

      Now their accounts would be transferred back to SP Group and they get the default Standard Tariff Rates all over again. Ouch!

      I mean they can always transfer to another Electricity Retailer for the 3% discount, but I think some in a fit of anger and frustration, saw the on paper "discounts" from SP Wholesale plan, and without doing their "Trust But Verify" due diligence...

      A bit like jumping out from the pan and into the fire...

      Which by itself is their own problem. But when they "jio" others to join them...

      That's where I come in ;)

    2. It seems that SP Wholesale got no contract period?
      So if users kenna burned for a couple of months, they can just go back to the default SP regulated tariff rates.

      Which is appear quite versatile, ie, when energy prices drop to more acceptable levels, then switch to wholesale, then in times like now, just convert back to regulated tariff when prices are rising.

    3. ERSG,

      Yes, that's why I liken it to shorting volatility or selling naked options.

      Most of the time you "save" until like those New Zealand or Texas consumers, you get a shock of a bill where you are legally responsible for.

      SP Wholesale is suitable for those skilled at market timing or have an edge when it comes to energy prices. (They can do a better job than those Electricity Retailers that got out)

      When they suspect energy prices will spike, switch to Default Standard Tariff. And when coast is clear, switch back to SP Wholesale ;)

      Although if like that, might as well trade Nat Gas or WTI futures direct to Earn More instead of Save More!

    4. Hahaha, ya. The switch in and out, is really a lot of effort to save $5-$10 per month.
      Whereas one good trade can make enough to cover the whole years electricity bill.


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