Open Electricity Market (OEM) : I Switch You Switch , Save ! Save! Save!

image credit to Open-electric.sg

Everyone seems happy recently (including STE ) as our pocket will  have some extra money from saving of our electricity bill by switching to some other’s retailers, other than SP Power.

STE just signed up with Keppel Electric on their FIXD24 plan at $0.168/kWh vs current tariff of $0.2413/kWh (before GST ) which is around 30% discount from current tariff + $20 NTUC voucher.  

😄

image credit to keppelelectric.com

Alternatively, you may also sign up with DOT24 Fixed Discount plan,i,e 22% discounted from the tariff, regardless of how much the tariff will be heading, peace of mind for at least 2 years.

Of course, this is not the only plan available in town, there are other retailers which may offer you a better deal. If you are still not sure what is Open Electricity Market (OEM) all about, please refer to below link: which may give you an overview of OEM and some of the offers from these retailers.

Complete Guide To Choosing The Best Open Electricity Market (OEM) Plan For Your Home (from Dollar and Sense.sg )

Well, STE is happy to save about $20++ per month from my electricity bill, which may use to offset some of my other utility bills.

image credit to keppelelectric.com

Question is “Where is all this saving Money$$ came from ?”

Someone forwarded this to me :

Why are SP Group's rates higher than retailers'? (from straitstimes.com)

A letter to ST Forum that asking why the retailers could offer a much lower rate than SP Power and still making money after all ops and marketing cost, assuming that this business model is profitable and they survive eventually?

 I try to do some rough estimation on how much saving as a nation in total by households breakdown, in case 30% successfully switch from SP Power to other retailers.

Why 30%?

“At a media briefing on Friday, EMA's chief executive officer Ngiam Shih Chun said that the soft launch in Jurong was "very successful".

About 30 per cent of households there have switched their electricity retailers. Those who did are paying a rate that is about 20 per cent lower than the regulated tariff.”

So what will be the total saving amount base on nationwide households usage data and switch ratio: 

Total saving (by all households) for 30% switch rate = $105.8 Mil

Total saving (by all households) for 50% switch rate = $176.3 Mil

So the question here is from where the saving/money came from? It will not just drop from the sky right or just chanting the “magic world “ : competition !! .

In the case of 4^th Telco entering the market to compete, when there was a price war which benefiting the consumer at large and the price needs to be paid by the incumbent 3 telcos, where we have seen their revenue and profits dropped significantly.

But for this case, there must be someone or entity need to fork out the money right?

Well, clearly it will be from SP Power’s pocket and again, the question which I posted earlier merry-go-round? Why SP Power has such high tariff in the first place and not just giving the discount direct to current consumer.

I have written a blog about the profit of SP Power (here )  What Happen to Genco when SP Power is making close to $1 Bil a year?

I might be too naive to understand the whole concept or the so-called “comprehensive and complicated formula” in setting the tariff where now suddenly we could have such huge cost saving just by switching the electricity supply from SP Power to other retailers.

Can someone shed some light or am I the only one in “dark” without the power supply from SP Power? :D

Cheers !!