Know What You Are Paying For
Third Party Charges Explained
In this blog post, we will discuss Third Party Charges for electricity in Singapore, including the various charges that consumers may encounter.
Let's start with a brief introduction to Third Party Charges. These are charges imposed by and payable to third-party entities involved in generating, transmitting, and distributing electricity. Retailers can absorb or pass these charges to consumers.
Use of system charges
The Use of System (UoS) charges are payable to SP Power Assets, which owns and manages the electricity transmission system. The UoS charges cover the costs of transporting electricity through the national grid. These charges may differ according to the voltage at which the consumer receives their electricity supply.
There are five components to the Use of System Charges:
- Peak Period Charge is levied on electricity consumption during periods of high electricity demand from 7 am to 11 pm. Peak Period Charge is typically charged in cents per kilowatt-hour (c/kWh).
- Off-Peak Period Charge is levied on electricity consumption outside peak hours, from 11 pm to 7 am. Like Peak Period Charge, this is also charged in cents per kilowatt-hour (c/kWh).
- Contracted Capacity Charge is levied on the consumer that takes supply at high tension based on the maximum contracted capacity of the consumer.
- Uncontracted Capacity Charge is levied for the additional capacity above the maximum contracted capacity of the consumer.
- Reactive Power Charge are calculated based on the amount of reactive power the consumer uses and are typically charged in cents per kilovolt-ampere reactive (c/kVAR).
Market Support Services
There are two components to the Market Support Service:
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Market Development and Systems Charge. Market Development and Systems Charge (MDSC) is a charge imposed by SP Services to support the development and introduction of new initiatives in the electricity market.
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Meter Reading and Data Management. Meter Reading and Data Management (MRDM) Charges are payable to SP Services to recover the costs of meter reading and data management, charged in dollars per meter.
Market Rules
Market Rules govern the operation of the National Electricity Market of Singapore (NEMS). The charge is typically calculated in cents per kWh.
Carbon Tax
Carbon Tax is a tax imposed on greenhouse gas emissions (GHG). The tax is intended to encourage the reduction of greenhouse gas emissions and promote the use of cleaner and more sustainable energy sources. The initial carbon tax rate was set at $5 per tonne for 2019 to 2023, to provide a transition period for businesses to adjust.
The Carbon Tax is currently set at $25 per tonne of greenhouse gas emissions (tCO2e) in 2024 and 2025. However, this rate will increase progressively up to $50-80/tCO2e by 2030 to help achieve Singapore's climate goal.
Vesting Contract Debit/Credit
Vesting contracts are a regulatory instrument preventing larger generation companies from withholding supply and pushing up half-hourly wholesale prices. These contracts are bilateral contracts between generation companies and SP Services, mandating a specified amount of electricity to be hedged at a specified price. The contract debits/credits are passed on to parties who buy electricity indirectly from the wholesale electricity market through SP Services.
In conclusion, Third-Party Charges are intended to cover the costs associated with the various aspects of electricity production and distribution, payable to various third parties. These charges can be absorbed by retailers or passed-through to consumers. It's essential for consumers to be aware of these charges and to understand how they are calculated so that they can better manage their electricity consumption and costs.