Types of Commercial Electricity Plans in Singapore & How They Impact Your Business Costs

Electricity accounts for a large portion of operating expenses for many businesses in Singapore. When utility costs eat into your budget, it becomes harder to set accurate forecasts and manage cash flow. 

Over recent years, the energy market has opened up to offer more flexibility. Today, organisations can pick from several options rather than accepting a single regulated rate. Each plan type delivers its own mix of predictability and potential savings. 

Understanding the different types of commercial electricity plans is crucial for any company looking to keep costs under control without sacrificing stability.

Understanding the Main Types of Commercial Electricity Plans

Businesses in Singapore typically choose between two primary types of commercial electricity plans: Fixed Price Plans and Tariff Plans.

Fixed Price Plan

This plan offers a fixed electricity rate throughout the contract period. It suits businesses that prioritise cost predictability. For example, manufacturers or offices with consistent energy needs might find this plan appealing.

The key advantage of a fixed price plan is stability. It allows for straightforward budgeting without surprises from market price swings. However, if market prices drop during the contract, businesses remain locked into the higher rate, potentially missing out on savings.

Tariff Plan

A tariff plan in Singapore typically follows the regulated electricity tariff set by SP Group, which is adjusted quarterly based on fuel and non-fuel costs. These costs reflect global energy prices and local operating requirements to maintain the national power grid. As such, the tariff can fluctuate, and any changes are directly reflected in your monthly bill.

For businesses, this type of plan means potential savings when electricity prices drop. However, during periods of high global fuel costs or increased network expenses, your bills may rise accordingly.

How These Plans Affect Your Business Costs

Selecting between a fixed price plan and a tariff plan depends on your company’s risk tolerance and energy profile.

Fixed price plans simplify forecasting. If your consumption patterns remain uniform, you can predict expenses with confidence. A retailer operating a 24-hour outlet, for example, might find this structure reassuring. Every month’s bill will be the same, which simplifies financial planning.

Conversely, tariff plans introduce variability. When tariffs fall, businesses using tariff plans enjoy lower costs straight away. However, if unforeseen factors drive tariffs up (such as spikes in fuel prices) your expenses can rise as well.

Choosing the Right Plan for Your Business

Several factors come into play when selecting the right electricity plan, such as:

• Energy Usage Profile: Is your consumption steady or fluctuating?
• Budget Flexibility: Can your business absorb variable costs?
• Risk Appetite: Are you comfortable with potential cost increases?

Review past consumption data to spot trends. If your usage rarely strays from a predictable band, a fixed price plan may suit you best. If your billing needs can flex, a tariff plan offers opportunities to save when market rates drop.

Imagine a small café that experiences peak demand during lunch and dinner but is quiet in between. That variable profile might find tariff plans more appealing, especially when they can adjust staffing or opening hours in response to costs. Meanwhile, a factory running production lines 24/7 will likely want the certainty that a fixed price plan provides.

Making Smarter Choices with PowerSelect’s Live Auctions

PowerSelect offers a transparent and efficient way to purchase commercial electricity plans through its Live Auctions.

Live Auctions last about 15 minutes. During this time, electricity retailers compete by bidding for your business. You set the auction parameters, such as contract length and plan type.

The transparent reverse bidding process encourages retailers to offer their best prices. As a result, prices decrease during the auction. This approach allows businesses to secure competitive rates quickly without lengthy negotiations.

Live Auctions are well suited for businesses seeking fixed price plans. It offers cost-effectiveness and speed, giving businesses more control over their electricity procurement.

When to Use Invitation to Tender (ITT)

Some businesses have unique electricity needs that cannot be addressed through Live Auctions. This is where the Invitation to Tender (ITT) process becomes relevant.

ITT is designed for companies that require special arrangements. For instance, businesses wanting to purchase green energy or hybrid contracts may use ITT.

Hybrid contracts may combine a fixed price component with a variable part linked to fuel prices. In such cases, electricity retailers submit customised proposals based on the business’s specific requirements.

Once proposals are received, companies can compare different offers and select the plan that best fits their needs. ITT is more suited for businesses with specialised consumption profiles or sustainability goals.

Get More Value from Your Electricity Plan

Selecting the right commercial electricity plan can significantly impact your business’s operational costs and budgeting, and help businesses align their choice with their energy usage and financial tolerance.

PowerSelect’s Live Auctions provide a transparent, fast, and cost-effective way to secure competitive commercial electricity plans. To explore the best electricity plans for your business, learn more here.