Since the November 2018 Open Electricity Market Act, consumers were presented with more options in terms of suppliers. This also leads to the competition which in turn leads to electricity providers competing for the same market share by trimming down their profit margins to offer savings for consumers. For the average person, this means that there is a choice between a regulated electricity tariff plan and other options such as a fixed tariff one. It is not uncommon to see plans that take the regulated tariff established by Singapore authorities and offer a discount on fixed-term contracts. The question that remains is which plan you should choose.
The fixed tariff plan is a relatively new concept. Up until 2018, this type of option did not exist. These plans imply that you will pay the same tariff per kWh for the duration of the contract which can be a 12 month or 24-month plan. For example, Senoko Energy offers several different plans with a fixed rate. These rates are usually calculated based on the latest regulated tariff. Electricity providers and an additional margin on top to cover eventual fluctuations.
For the consumer, a fixed tariff means predictability. You know how much you will pay each month based on your consumption without adding the variable or a fluctuating energy price. The only disadvantage is that when the regulated tariff goes down, you will end up paying more than other consumers that have a regulated tariff. On the other hand, if you have a fixed electricity tariff plan, if the regulated price goes up, you will pay the same. While others pay more, you will pay less than the market price. In the end, you get to pay a bit extra to be protected from energy pricing fluctuations.
If you choose to go for a regulated tariff, you depend on the price set by regulators. However, you can get reasonable deals depending on which provider you choose to go with. For example, Senoko Energy offers a 6% discount off the regulated tariff if you get a 12-month electricity tariff plan. The 24-month contract discount is halved which means it may not be worth considering. Other suppliers apply a similar strategy in which they offer you the regulated price but apply a discount to make the offer more appealing.
The advantages come from the fact that you will probably pay less than someone with a fixed tariff plan. This advantage applies only while the regulated tariff calculated by authorities is lower than the fixed price that was offered at the moment you signed the contract. If the regulated tariff goes higher, you then pay more than someone that opted for a fixed tariff plan.
Both types of plans are worth considering. They have advantages and disadvantages. While the fixed plan offers a certain degree of protection, some may opt for the regulated tariff to save some money in the beginning. Energy prices can fluctuate. Singapore is not immune to external factors that may drive the electricity tariff plan up or down. Energy market instabilities can have severe consequences and that can be seen in Europe. For Singapore, things are less dramatic. However, you need to keep in mind that if you want to cancel a contract and switch to a different provider or different type of plan, you may be forced to pay some cancellation fees.