(Design: The Scientist)

The Energy Market Authority (EMA) is looking to apply greater free market principles to our power grid. Starting the second half of 2018, Singaporeans may be able to choose from several electricity price plans from electricity retailers.

But what will these new plans mean for your electricity bill? How will this help Singaporean households save money?

What Are Electricity Price Plans?

At present, there is a standard approach to pricing electricity in Singapore. However, allowing a greater degree of free market competition means allowing electricity retailers to have different pricing policies.

Much like how gym have different price packages, or telcos have different data bundles, Singaporeans will be able to pick an electricity package that fits their needs. Some of these plans will probably include:

(Design: The Scientist)

1. A Night Savings Plan

Under this type of package, electricity costs less during the day than during the night. This is ideal for households with low power consumption after certain hours. For example, in a household that often turns in at 10pm, power consumption can drop significantly if no one watches TV or uses the computer. 

Of course, for night birds this is not necessarily true. If you do shift work and mainly sleep in the morning while watching TV or going online late at night, this might not work for you.

2. An Eco-Friendly Plan

This package could feature power drawn mainly from non-fossil fuel sources, such as solar energy. Although nothing has been announced yet, we suspect that these packages may come with subsidies. Such plans will lower Singapore’s reliance on imported fuels and improve the environment, and will help you save electricity even with the air conditioning on.

3. Low Usage Plans

Some households do not use much energy at all. For example, some people may stay abroad for two months out of every year, due to work commitments (like working on ships or oil rigs) or a spouse living overseas. These people would have a disproportionately lower power consumption than neighbours in the same building.

Low energy usage plans can come with an extremely cheap base cost and will charge more for excess consumption above a certain amount. As their consumption is low, the users of such a plan would save a significant amount.

(Design: Free Space Intent)

4. Bundled Services

Power companies will need a way to differentiate themselves. After all, everyone’s electricity is of the same quality!

The general consensus is that, for these companies to be competitive, they will have to focus on price and bundled services. This means the electrical services subscription will come with extras, such as discounts on energy-efficient appliances.

Short-Term Trial Packages Will Be Available Soon

During Singapore’s International Energy Week, electricity retailers such as iSwitch mentioned they would be offering short-term trial packages. From our queries, these packages are about six months long, which should give consumers plenty of time to gauge the price impact.

This is not just to see if you can save money. It also lets you switch between packages once they all launch, so you can find the one that saves you the most.

Expect to Save 10 to 20 Per Cent from Your Electricity Bill

In the linked Straits Times report, Mr Vijay Sirse, chief executive of Red Dot Power, said: “It is expected that every household will potentially save anything from 10 per cent to 20 per cent of its monthly electricity bill.”

According to Singapore Power, the average bill for a three-room flat is around S$113.40 per month, while the average bill for a five-room flat is around S$163.80 per month. At 10 per cent less, that would be savings estimate of between S$11 to S$16 per month for most HDB flats.

For most condos, the average power bill is around S$182 per month. This would mean a savings of about S$18 per month.

In the Long Run, Electricity Prices Won’t Rise So Quickly

As a condition of the free market, it is harder for prices to go up. When the overall price is too high, any one company can undercut it slightly to poach customers. This is especially true for a service like electricity, in which there is little differentiation apart from pricing.

In the long run, this could mean the rate at which electricity prices rise will be slowed. There will be strong inclination for these companies to stay competitively priced. Overall, the implementation of electricity price plans is good news for Singaporeans.

This article was first published on SingSaver.com.sg, a financial comparison site that provides tips and advice on saving money in Singapore.