Reconsider increase in electricity tariffs to reduce burden on households and businesses

Year: 2020

This post is written as a brief comment to an article published on Channel News Asia titled: Electricity tariff for households to rise by 9.3% in October to December (30 September 2020).

“FMG understands the mechanism behind price setting of energy costs and considers the EMA to be a competent Regulator. Under normal conditions, price rises are absorbable by households and businesses. However, we disagree with the decision to raise energy prices at this time and with the EMA for approving the decision. We also disagree with the logic given as well as the magnitude of the increase – 9.3%.

First, the economy is in significant distress – businesses struggling on edge of solvency and unemployment is rising.

Second, such a significant increase coinciding with what will likely be an even worse quarterly economic performance creates a deleterious effect on the economy and households.

Third, oil and gas prices are low, so the reduction of raw product input costs for energy should be offsetting any rises in the cost factors cited by SP Group and the EMA.

Finally, the broader national interest should have been considered and prevailed over other considerations – the Regulator thus should have vetoed the request to raise energy prices rather than continue in a ‘Business As Usual’ mode.

FMG calls for a reconsideration and reversal of this decision and a policy pledge by the government to freeze energy prices until economic conditions stabilise.”

– Devadas Krishnadas
CEO, FMG