Electricity bills up 21%

[Silence Sky]

hedging should be illegal.

even hawkers cannot do that when prices of raw materials like eggs, veggies & sugar prices increase when they did. why should large companies get away with such malpractices! :think:

Hedging is legal, but for the big boys only.

A hawker can't take 1ton of sugar (depending on the minium contract size) at the delivery date, right?

 

[denniskee]

In the first place, do they need a reason to increase price?
If you really must have a reason, it will be "pay first before you ask for something better".

havent you guys hear this before?

do or die, dont ask why.

 

[sORe-EyEz]

Hedging is legal, but for the big boys only.

A hawker can't take 1ton of sugar (depending on the minium contract size) at the delivery date, right?

its legal, but it should be made illegal as these big boys are abusing the system! :thumbsd:

most hawkers cant take 1 ton of sugar, but a franchise may be able to.... :sweat:

 

[spindoctor]

That's becoz it is 3 months forward price.

Theoretically, spot price will eventually converge to forward price.

Thanks for the info. But is oil actually bought at forward prices or spot prices? How are forward prices determined? I have limited knowledge of these things but way I see it, since oil is such a limited and essential commodity, forward prices will always be high.

 

[Reno]

Even so, the price of USD150 per barrel is too much compare to now USD100 per barrel, i can understand if they mark the price at USD125, but not USD150.

 

[Silence Sky]

There is some confusion on my part. We are talking about $155 SGD. I tot is USD$155.:embrass:

 

[eow]

was thinking now Sp had gone private.
let said if the present gov is the opposition running the country, are they in any position to stop Sp?
or it will be the same as now?

 

[zcf]

Since July 07, the price of electricity has gone up from 18.88 cents/Kwh to 30.45cents/Kwh, which is 61% increment, every 2~3 months, it seem to increased by 4~21%. :sweat:
According to:
http://www.straitstimes.com/STI/STIMEDIA/pdf/20081002/UpwardTrend.pdf

 

[foreverlovex]

Sorry, I don't understand your points.
Hedging is a tool used by producers to protect themselves against negative price movement in the future.

Let's say you hedge at $155/barrel three months ago.
Today you buy oil at the spot rate $100/barrel, how can you charge me $155/barrel?
At worst you should only pass on the losses on the premium for the call option to the consumer.

I look at this as a case of cheating.
To make it worse you charge me $155/barrel three months before you take the delivery at $155/barrel!

How about the other scenario.

Let's say you hedge at $55/barrel three months ago.
Today you buy oil at the spot rate $100/barrel. Do I charge you $55 or $100? In this case, SP Services has to "eat" the $45 bucks price difference.

From a consumer point of view, you are unlikely to notice when SP Services "takes" the hit.

 

[StrifeYun]

Time to shower at public toilets,
Eat at Chinese temples, where free meals are given out,
Sleep at open space eg void decks or parks( so no need to on fan or aircon)
Spend more time at the library to enjoy the aircon,
Use candles at home to light up the room,
Watch television programmes at coffeeshops,
Surf internet at McDonald, using their electricity.

Any more ideas?...

the bottom line is.....let's go back to our life in the 70s or 80s where consumption of electricity is not so high.

candles produce too much heat, too little light, use an LED flashlight instead.

go public places charge our batteries for laptop, tourchlights, electric outdoor cookers, battery powered shavers and fans, ect ect . so at hme no need electricity

 

[foreverlovex]

Thanks for the info. But is oil actually bought at forward prices or spot prices? How are forward prices determined? I have limited knowledge of these things but way I see it, since oil is such a limited and essential commodity, forward prices will always be high.

oil is actually bought at spot price. But for certainty in the price, it has to be hedged. It is insane not to hedge as you will be subjected to great price volatility.

Theory wise, 3 months forward price is likely to be what is the spot price 3 months from now that ppl expected to pay.

I.e. if ppl expect spot prices to fall in 3months time, 3 months forward likely to be around that price. I just explaining things in a simple way. Academically, there is a million and one ways to model such stuffs.

 

[foreverlovex]

hedging should be illegal.

even hawkers cannot do that when prices of raw materials like eggs, veggies & sugar prices increase when they did. why should large companies get away with such malpractices! :think:

What i mean is financial hedge. This is to give certainty.

If you don't mean paying $X for the product say 3 months from now......you will hedge at $X to be settled in 3 months from now.

3 months from now, at least you are certain that you be paying only $X and not $X+Y. Of coz it can work against you too.......if say the product price falls below $X to $Z. This means that you will be overpaying $X-$Z.

The key point is to smooth out price volatility and have price certainty.

 

[foreverlovex]

Hedging is legal, but for the big boys only.

A hawker can't take 1ton of sugar (depending on the minium contract size) at the delivery date, right?

Most of the hedging tools are non-delivery types. I.e. Mostly financial settlements type.

 

[foreverlovex]

the energy market is not supermarket, dun like 1 can go to others. just like public transport, there is very little alternative wan.

consumers at the end of the line "just swallow" lar....

sigh. what can we do.....

just hope that the really bottom layer of the society can have more assistance bah.

 

[blazer_workz]

sigh. what can we do.....

just hope that the really bottom layer of the society can have more assistance bah.

very wrong mentality..whenever there's inflation or some kind..ppl oni look at giving out aids to the poor or needy..then wat happen to the middle income group?? The worst hit is actually the middle income group who are being sandwich here..its really stressful to be in the middle income group..doesn't qualify for relieve, even if there is, its oni minimum, perform/work hard at work and see some pay rise, thought of setting up family or having children, in the end or taken back by all these rising cost..how to have more babies like that??

ultimately..more middle income group will be moving down to the lower income group..those who couldn't take it will choose to retire..

 

[denniskee]

thats the problem with the 80-20, top 20% income group suppose to help the lower income group. no help for the middle income cause we are expected to be able to take care of ourselves, despite the ever increasing cost (like the PUB bill up 60%+ from last year etc) but salary increament is min. so we stay competitive (company is supporting govt's call).

than again, the govt never force anyone to stay here, if dont like it here, just leave lor. (something to this extend, that the feeling i am getting).

 

[sORe-EyEz]

oil is actually bought at spot price. But for certainty in the price, it has to be hedged. It is insane not to hedge as you will be subjected to great price volatility.

Theory wise, 3 months forward price is likely to be what is the spot price 3 months from now that ppl expected to pay.

how spot on is the reason.

certainty in price? uncalled for inflation is certain, thatz for sure.

was thinking now Sp had gone private.
let said if the present gov is the opposition running the country, are they in any position to stop Sp?
or it will be the same as now?

nationalise.

this Sg Inc. is going too far. privatising has not benefitted residents (locals/ PRs alike). worse hit will be home owners with maids....

 

[foreverlovex]

how spot on is the reason.

certainty in price? uncalled for inflation is certain, thatz for sure.



nationalise.

this Sg Inc. is going too far. privatising has not benefitted residents (locals/ PRs alike). worse hit will be home owners with maids....

It doesn't need to be spot on. It is just that you must be willing to pay for certainty. I doubt many will complain when you hedge at $50 and the spot price is $100.

Main aim of privatizing is to gain efficiency. Electricity consumption does not have positive externalities unlike say education so why subsidise?

If it is cheap ppl will just use more than the optimal.

As an economist, if i have my way i would have a conservation tax on electricity. The negative externalities of electricity is unlikely to be reflected by it price yet.

 

[sORe-EyEz]

It doesn't need to be spot on. It is just that you must be willing to pay for certainty. I doubt many will complain when you hedge at $50 and the spot price is $100.

Main aim of privatizing is to gain efficiency. Electricity consumption does not have positive externalities unlike say education so why subsidise?

If it is cheap ppl will just use more than the optimal.

As an economist, if i have my way i would have a conservation tax on electricity. The negative externalities of electricity is unlikely to be reflected by it price yet.

by the look at the posts do you think most are willing to pay for the certainty?

lower prices leading to higher consumption does not make it right for energy providers to charge more. so far the oni efficiency gained is collecting bills.

if gaining efficiency is the goal of privatising, i know wad is best to privatise next! hehee... :bsmilie:

 

[foreverlovex]

by the look at the posts do you think most are willing to pay for the certainty?

lower prices leading to higher consumption does not make it right for energy providers to charge more. so far the oni efficiency gained is collecting bills.

if gaining efficiency is the goal of privatising, i know wad is best to privatise next! hehee... :bsmilie:

If the price is going the other way, you would love to pay for the certainty. But you can't possibly want it your way when you have the advantage.

Agreed that it does not make it right for energy providers to charge more. Therefore as I mentioned, that is to be taxed by the government to prevent higher consumption.

It is the same for education. Consumption of education is good. Lower prices lead to higher consumption. Therefore govt and not the education providers should subsidies.

SP Services is not charging more. They "buy" and pass through. Simple stuff.