The Rise of the Rates

Having read the news today, I was shocked to see a blatant article on the drastic raise of electricity tariffs overnight. Moreover, the article was phrased in such a way so as to put the blame squarely on the works of the markets. The timing however was not unexpected as articles on electricity conservation were published some days ago. It was the magnitude that did it.

Apparently, according to the article, the “Energy Market Authority” approved this raise. This certainly raises my eyebrows because this reflects succinctly which side this “regulatory authority” stands on. The next shock lies in their justification and their seemingly well prepared “charts and figures”.

In the first place, natural gas is used to generate electricity, not crude oil. Secondly, the price of oil has been falling for a few weeks and this raise in tariffs when the spot prices are low are hardly justifiable.

I’m wondering if this is a business decision gone sour and as a quick-fix to their bottom lines, costs are passed onto the customers.

“In a market where oil prices are relentlessly moving up, by pegging to three-month forward fuel price, we have been better off by and large,” said EMA chief executive Khoo Chin Hean, referring to how oil prices have surged over the last year.

So, the magic question is, “who pegged the prices?” And if they did as a form of “hedging”, it certainly failed and are paying for the risks involved; why punish the consumers for NOT making the decision?

As a regulator, the EMA has the cheek to tell consumers to “cope” by “using less air-conditioning, switching off lights and opening refrigerator doors less often”. It sounds exactly like a certain Member of Parliament telling members of the public on choosing cheaper groceries and foods. What has happened to saying NO to price increases?

Really, it makes me wonder what regulators and regulatory frameworks are for. From the MAS to EMA to the PTC, all of them are tasked to ‘regulate’ their various markets, but on whose side do they stand on? In truly uniquely Singapore, it’s anyone’s but the consumers.

Case-in-point, given the latest melt down of the following, “DBS High Notes 5, Lehman Minibonds and Merrill Lynch Jubilee Series 3 LinkEarner Notes”, the position of the MAS hasn’t exactly been regulatory in nature. It’s more like an arbitrator, trying to cast aside as much work and blame as possible, in total contrast to HKMA. HKMA went straight to meet with the investors and subsequently launch investigations into mis-selling, NOT hammer out a deal with banks so as to allow them to appoint “independent parties”. Appointing independent parties to report to the banks would allow their legal teams to plan defences from any possible malpractices, defeating the purpose of complaints in the first place.

Speaking of the PTC, I’ve seen more posters deterring commuters from under-paying fares than any form of service level improvements. Apparently, even with the installation of the EZ-Link system “to curb fare evaders”, the PTC still had to spend so much effort to deal with fare evaders, rather than the appalling standards of the public transportation system. Apparently, the profitability of the “public” transportation companies comes before service levels.

Anyway, in another year or so, I can’t wait to get out of this place. Maybe coming back just to cast my vote in the general elections.