SP Group, the government-owned electricity distribution company has lost the monopoly over the energy market in 2018. The current SP electricity tariff is still held as a reference for most consumers since SP still holds the majority of the market share. Independent energy distribution suppliers for domestic consumers tend to adjust their prices in close relationship with the prices practiced by SP.
The way the SP group calculates electricity tariffs consists of four factors. The tariff must cover the costs of producing the energy, market support services such as reading meters, billing, etc, cost of energy transportation, and operator fees. When all these are factored in, SP determines the price per kWh.
Some of these costs are fixed while others can fluctuate. To avoid losses, the current SP electricity tariff is valid only for a quarter or 3 months. After 3 months, the tariff is calculated again. This makes it a variable tariff that is adjusted based on costs. This means of calculation is imposed by the Energy Market Authority or EMA which has strict rules on how the regulated tariff needs to be calculated at the end of each quarter.
For the second quarter of 2021, SP Group will increase the electricity tariff by 8.6%. This hike in price is driven by higher fuel costs required for energy production. Based on their market share, it is estimated that about 50% of all domestic consumers will see an increase in kWh compared to Q1 2021. The increase is from 20.76 cents per kWh to 22.55 kWh. This tariff does not include goods and services tax (GST).
The tariff increase affects only consumers that have a contract for the regulated tariff. Independent energy distributors may have lower prices per kWh. A fixed tariff plan from an independent distributor may help reduce the energy bill. Compared to the current SP electricity tariff, the fixed tariff price per kWh can be even 10% or 15% lower.