Shocking price increase from Singapore Power

The latest in a string of price increases from Singapore companies reporting good profits and growth is a 21% hike in electricity tariffs by Singapore Power.

Here is a letter I wrote to the Straits Times Forum on 4 Oct 2008:

Dear Editor,

Reading your newspaper this morning (ST 4 Oct 08) got me all charged up, thanks to one particularly shocking article titled "Queries on your power bill answered". SP conveniently justifies it's tariff increase by pointing at the 3-month forward fuel oil price, which is odd because 80% of it's electricity generated comes from Natural Gas, and also because everyone expects fuel prices to fall in the near term, as more countries follow NZ, Ireland and France into recession.

Singapore Power's Profit in FY07/08 was $1.085 billion (ref SP website). Very respectable results by any standard, more so against the backdrop of 2008's spiking crude prices and inflation. So why the hefty tariff increase? It seems that SP simply wants more profit, at the risk of adding to the difficulties it's customers already face. Easily found on SP's website is their mission statement: "We provide reliable and efficient energy utility services to enhance the economy and the quality of life". We certainly don't begrudge SP a reasonable profit for the services they provide, but the mission statement is a clear reminder that the well being of Singapore's economy and it's people matter more than profits beyond what is reasonable.

Your article mentions that the Singapore Government "has a poilcy of subjecting essentials like electricity, water and oil to market forces..." We've heard the same argument regarding the prices of HDB flats - where the price is not tied to the actual cost of materials and cost of land acquisition, but to the market value of flats in that area, and the market value of the land the flats are built on.

There is wisdom in not providing or minimizing subsidies, but one must question the assumption that allowing the free play of market forces and business' drive for profit at all costs is the best way to deliver well being for the ordinary citizen. The reputation of the free market religion has taken a serious trashing with the financial turmoil in the US housing market and Wall Street. These markets succumbed to human greed and an emphasis on short term profits at the expense of the long term health of the world economy, and are now dragging the global economy down with them.

A quick survey of the big news of the last few weeks gives us shocking examples of how an overemphasis on the profit motive has harmed those our society should most protect. Young children killed by tainted infant formula. Elderly retirees losing their retirement savings from investments marketed to them as safe.

The US Presidential and Vice Presidential debates have their candidates proclaiming their support for the middle class, and their belated discovery at how badly squeezed main street has become. Election talk, yes. But reflective of the mood of the American public. More market regulation all over the world is a near term certainty, and one hopes that companies will modify executive compensation to reward actions that generate long term benefit and moral leadership, instead of short term profit at any cost.

Perhaps its time for Singapore companies, particularly those that provide essential services and staples to the Singapore public, to move from a quest for profit leadership to moral leadership, and elevate the well being of their customers to the highest priority. Now that would be really electrifying news.