SINGAPORE – Wholesale electricity prices in Singapore have been climbing in recent weeks as the conflict in the Middle East continues to cause volatility in the price of natural gas used by power generation companies to produce electricity.
The weekly Uniform Singapore Energy Price (USEP), a measure of the wholesale cost of electricity, hit $486.21 per megawatt-hour (MWh) in the week of Sept 13 to 19 – the highest level so far in 2026.
Besides being heavily influenced by fuel costs, the USEP – the spot price in Singapore’s wholesale electricity market – is affected by real-time power supply and demand. This is because power generation companies submit information every half hour indicating how much electricity they can supply and at what price.
The Energy Market Company (EMC), the independent operator of Singapore’s wholesale electricity market, has likened this to “dynamic ride-hailing surge pricing”.
“Just as fares rise during evening rush hours and drop late at night, USEP recalculates wholesale electricity prices every 30 minutes based on real-time power supply and demand,” the operator said in a recent LinkedIn post.
For instance, weekly USEP reached a previous year-to-date high of $439.35 per MWh in the week of Sept 6. This is a 71.5 per cent increase from the preceding week because of higher electricity demand and a fall in supply.
Meanwhile, the USEP fell in the week of July 26 as cooler temperatures contributed to a drop in demand, while supply increased.
Electricity supply depends on factors such as the availability of natural gas. Imported natural gas accounts for about 95 per cent of Singapore’s electricity generation, and its price is largely tied to market prices.
Here’s how your electricity bill could be affected by wholesale electricity prices.
Wholesale electricity buyers
If your household is part of the under 0.1 per cent in Singapore buying electricity at wholesale prices, you would have been hit by price increases stemming from factors including the Middle East conflict.
This is because your electricity purchase rate changes according to half-hour fluctuations in the USEP.
The Energy Market Authority (EMA) has warned that, in view of developments in the Middle East, households buying electricity at wholesale rates may end up paying more than those on regulated tariff or fixed-price retail contracts.
The agency added that wholesale electricity prices may become higher and more volatile as fuel costs rise because fuel costs make up the majority of power generation costs.
Households on electricity tariff
The USEP has no impact on the regulated tariff at which most households buy electricity through SP Group.
But fuel cost fluctuations that affect the USEP also impact the tariff.
David Broadstock, partner at energy consultancy The Lantau Group, said: “The current mechanism (to calculate the tariff rate) gives a heavy weight to fuel prices, which, under a predominantly natural gas system, anchor quite closely to USEP.”
This tariff is set quarterly by national grid operator SP Group and is largely based on average daily natural gas prices in the first 2½ months of the preceding quarter.
This means the rate for the fourth quarter of 2026, which will be announced in late September, will be heavily weighted by energy costs from July to mid-September.
Spot liquefied natural gas prices in Asia have more than doubled since late February, when the US and Israel launched strikes on Iran.
The Singapore Government warned that the resulting disruptions to oil and gas production in the region would take time to recover, and consumers should be prepared for the regulated tariff to increase in subsequent quarters.
However, regarding the upcoming fourth-quarter tariff rate, Broadstock was more optimistic, saying he does not expect a dramatic increase or decrease as the Iran-US conflict has reached a phase of relative stability and that “a downward revision may be possible”.
He also noted that a considerable part of Singapore’s supply of natural gas is hedged and purchased at prices locked in via contracts, instead of spot natural gas prices.
Still, the Government has said that supply disruptions due to the Middle East conflict meant that generation companies have to source for replacement fuel, which is more expensive and raises the costs of power generation.
Households in Singapore saw a 17 per cent increase in their electricity tariff in the third quarter ending Sept 30. The tariff is currently at its highest level to date.
Any increase in the electricity tariff will translate to higher bills if households on the tariff do not lower their electricity usage.
For the third quarter, the tariff rose to 31.91 cents per kilowatt-hour (kWh), which is 4.64 cents per kWh higher than the previous quarter.
SP Group said this could result in a four-room HDB household’s monthly electricity bill rising by $17.14, before GST.
Households on fixed-price plans
Households on fixed-price plans have signed a contract with electricity retailers, which have to buy electricity on the wholesale market but hedge against pricing spikes by securing future prices through contracts.
The proportion of households on fixed-price retail plans increased between Feb 1 and June 1, 2026, from around 36.6 per cent to 37.1 per cent.
Fixed-price plans allow households to lock in the rate at which they buy electricity for the duration of a contract – which means they are not affected by changes in the USEP for the length of their contract.
However, if the USEP stays high, their next contract renewal with an electricity retailer may be at a higher rate, the EMC said.
There are currently six electricity retailers offering plans for households, namely Geneco, Keppel Electric, PacificLight Energy, Sembcorp Power, Senoko Energy and Tuas Power Supply.
The retailers are “gentailers”, whose revenue from power-generating assets can help hedge against fluctuations in the USEP.
Flo Energy, which is the only independent retailer on the Open Electricity Market, currently does not supply electricity to households.
Its co-founder and chief commercial officer, Ernst Westendorp, told ST that it is scheduled to serve residential customers in 2027.
“With energy markets still unsettled due to global tensions, we’re more cautious and try to hedge 100 per cent of our contracted customer load in advance,” he said.
A global energy crisis in 2021 saw six electricity retailers close down following wild swings in wholesale prices.
But regulatory changes were made in 2023 to make retailers more resilient to market volatility.
