1st April 2018 saw the soft launch of the Open Electricity Market in Singapore ushering in a new age of competitiveness, lower prices and new retailers competing hard for your money! While it might seem overwhelming with the various plans in the market with different labels, it all really boils down to three types of plans which are very different from each other.
1. Fixed Pricing Plans
2. Discount Off Regulated Tariff Plans (DOT)
3. Peak & Off-Peak Plans
While there is really no ‘best’ plan out there for everyone, it is essential to know the 3 different options and discover the smartest plan to choose for your own unique situation and lifestyle.
So What Are The Three Types of Residential Plans?
The Fixed Price Plan
These plans will allow consumers to pay for their electricity use at a fixed pre-agreed pricing for the entire duration of their contract. This plan allows households to have billing stability as your final costs will only be pegged to how much electricity you use and not based on the price change of the tariff. Consumers under the fixed price plan will enjoy cost savings when the oil & gas prices rise but conversely, when oil & gas prices fall, they will be paying a premium on their electric bill. For example, if you get onto a fixed price plan at 20 cents/kWh for 12 months, you will be paying that same rate of 20 cents/kWh throughout the time period regardless of whether the tariff rate rises to 30 cents/kWh or drops to 15 cents/kWh – you will not have any bill shocks from your electricity price rate.
Discounted Off Regulated Tariff Plans (DOT)
DOT allows consumers to buy electricity in a hassle-free manner without the need to monitor the oil & gas markets to ‘book’ a good long-term pricing. With DOT plans, you will always be paying less than buying directly from the SP Group. While you will be enjoying guaranteed discounts all year round, you will be subjected to the effects of rising and falling oil prices which could see your bill rise higher on certain periods or drop lower for others.For example, on a DOT plan, you will be paying a variable rate that could be 20 cents/kWh before rising to 25 cents/kWh in the next month, before falling down to 18 cents/kWh near the end of the year. Your pricing will be determined largely by the oil markets.
Peak & Off-Peak Plans
These plans allow their customers to enjoy different rates at the time of your usage. This means at the peak hours defined by the retailers, if you turn on the switch, you will be paying higher prices than if your usage happened during off-peak hours. For example, if you regularly use more electricity during peak hours, you might be paying 25 cents/kWh whereas if you limit most of your usage during off-peak hours, you could be paying only 15 cents/kWh. When it comes to peak & off-peak plans, it is important to take note of what is considered peak and off-peak timings for the different retailers. Some might consider 7am-7pm a peak timing but might be charging a slightly higher rate while other retailers might fix 7am-11pm as their peak timing but have a cheaper peak rate.
Understanding Your Lifestyle Is Key
One of the better ways to choose your electricity plan is to make a selection based on your lifestyle needs. If you and your family are heavy electricity users throughout the day (including peak hours), would desire a high degree of price certainty for budgeting and believe the rates today are reasonably cheap – Fixed pricing might be a good choice. If your household, is new to the electricity market or getting a plan for the first time, desire to have guaranteed savings from the tariff rates no matter the situation and have no time to track and monitor oil prices – DOT plans could be ideal for you. Maybe you are in full control of your home’s electricity use or your daily activities are centered either late at night or early in the morning, then Peak & Off-Peak plans will deliver higher cost savings for you. While it might be tempting to immediately jump into the first plan that might give you the immediate cost savings, it is better to take a step back and take in the bigger picture and which of these 3 plans might better suit your lifestyle. Tailoring your electricity plan this way will not only be less of a hassle, it will help lead to greater cost savings over a long-term period.