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Thread: Electricity bills up 21%

  1. #181

    Default Re: Electricity bills up 21%

    Quote Originally Posted by sORe-EyEz View Post
    thatz your idea, not mine.

    at the end of the day, has privatising energy market lead to a more efficient outfit? since major sentiment is that they just pass the increase to consumers...
    maybe u can try to read the materials I linked to?

    Not many economists are interested in Singapore electricity and energy issues so only a few have wrote academic papers on it. Think for academic ones maybe you can look at some of the papers written by Dr Chang Youngho?

  2. #182
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by foreverlovex View Post
    maybe u can try to read the materials I linked to?

    Not many economists are interested in Singapore electricity and energy issues so only a few have wrote academic papers on it. Think for academic ones maybe you can look at some of the papers written by Dr Chang Youngho?
    maybe u can try answering some of my questions in the past few posts? rather den just presenting ur views...

    dun blame me if dun see eye to eye on some issues if u ignore others, den carrying on whacking...

  3. #183

    Default Re: Electricity bills up 21%

    Quote Originally Posted by foreverlovex View Post
    oil is actually bought at spot price. But for certainty in the price, it has to be hedged. It is insane not to hedge as you will be subjected to great price volatility.

    Theory wise, 3 months forward price is likely to be what is the spot price 3 months from now that ppl expected to pay.

    I.e. if ppl expect spot prices to fall in 3months time, 3 months forward likely to be around that price. I just explaining things in a simple way. Academically, there is a million and one ways to model such stuffs.
    Quote Originally Posted by foreverlovex View Post
    What i mean is financial hedge. This is to give certainty.

    If you don't mean paying $X for the product say 3 months from now......you will hedge at $X to be settled in 3 months from now.

    3 months from now, at least you are certain that you be paying only $X and not $X+Y. Of coz it can work against you too.......if say the product price falls below $X to $Z. This means that you will be overpaying $X-$Z.

    The key point is to smooth out price volatility and have price certainty.
    Quote Originally Posted by foreverlovex View Post
    This is a good question.

    Global gas price is linked to oil price movement. This is same for every commodity that can be a good substitute to oil (e.g. coal). You may look at Henry Hub gas prices and compare it with oil price movement over time. As a small country with no resources we can't delink from the market. If we don't pay market price, we don't have our oil and gas and hence electricity.

    There is a global market for gas prices and generally, gas contracts are linked to oil price movement. Our neighbours are not stupid.
    foreverlovex hit the nail on the head - it's just bad luck that they locked into a forward contract 3 mths back (for now) when crude prices were way high. Take a look at another way - not locking into oil forwards means that you're speculating on the market. Yah, everyone's cursing at the "wrong hedge", but what if spot crude is now at USD$200/barrel?

    However in reality, given that forward contracts are often used in speculating on the oil market (and since gas is linked to oil) - hedging through forwards might not necc. provide you with a true hedge against gas prices. But then again, it's the public that they are dealing with - can they (rather, we) afford to take the risk through actively managing our gas requirements? All it takes is just 1 wrong bet, and we will curse and swear like mad.

    (edited this part for clarity: I'm using oil as an example, but gas prices are very much linked to oil, so it's the same idea. my brain isn't working.. :P)

    So at the end of the day, probably best for them to stick to existing arrangements. My POV though. It'll only be for 3 months (hopefully!)

    Quote Originally Posted by Silence Sky View Post
    Given the scenario, I will let my call option expire if the strike price is less than $100 and buy at the spot rate $55. But that does not mean I have lost $45, what I have lost is the premium I pay for the call option which is much less than $45.

    They have hedged the oil at S$155, I think is it fair as major airlines have also hedged at that price range.
    I think you're referring to options and not forward contracts - there is a difference. Options are "insurance premiums" that you pay to be able to buy/sell an underlying, at a particular price (termed as the strike price), sometime in the future (exercise date). In your scenario - you are able to forgo the option (just throw it away) because you merely bought a right to buy/sell the underlying at strike price.

    On the other hand, forward contracts are real contracts that you enter with another counterparty to buy/sell an underlying at a specified price in the future. There is no way to "forgo" a forward, because you have the obligation to make good your promise.

    Only way to offset this would be to unwind the forward, by entering into another forward contract with the same terms, but on the opposite direction. There is no way to "forgo" the contract just like that.
    Last edited by SNAG; 3rd October 2008 at 12:55 AM.

  4. #184

    Default Re: Electricity bills up 21%

    Quote Originally Posted by SNAG View Post
    foreverlovex hit the nail on the head - it's just bad luck that they locked into a forward contract 3 mths back (for now) when crude prices were way high. Take a look at another way - not locking into oil forwards means that you're speculating on the market. Yah, everyone's cursing at the "wrong hedge", but what if spot crude is now at USD$200/barrel?

    However in reality, given that forward contracts are often used in speculating on the oil market (and since gas is linked to oil) - hedging through forwards might not necc. provide you with a true hedge against gas prices. But then again, it's the public that they are dealing with - can they (rather, we) afford to take the risk through actively managing our gas requirements? All it takes is just 1 wrong bet, and we will curse and swear like mad.

    (edited this part for clarity: I'm using oil as an example, but gas prices are very much linked to oil, so it's the same idea. my brain isn't working.. :P)

    So at the end of the day, probably best for them to stick to existing arrangements. My POV though. It'll only be for 3 months (hopefully!)



    I think you're referring to options and not forward contracts - there is a difference. Options are "insurance premiums" that you pay to be able to buy/sell an underlying, at a particular price (termed as the strike price), sometime in the future (exercise date). In your scenario - you are able to forgo the option (just throw it away) because you merely bought a right to buy/sell the underlying at strike price.

    On the other hand, forward contracts are real contracts that you enter with another counterparty to buy/sell an underlying at a specified price in the future. There is no way to "forgo" a forward, because you have the obligation to make good your promise.

    Only way to offset this would be to unwind the forward, by entering into another forward contract with the same terms, but on the opposite direction. There is no way to "forgo" the contract just like that.
    I am glad that someone else understands the situation.

  5. #185

    Default Re: Electricity bills up 21%

    i thank foreverlovex and SNAG for explaining the situation - i was also quite perturbed as to how this price adjustment worked out.

    understandably this might not absolve all responsibility for the supposedly accused organisations - but even then, at least the situation is made clearer. and as usual, when the mindless complaining mass meets with something that appears to defy their own mentality.. it falls silent.

  6. #186

    Default Re: Electricity bills up 21%


  7. #187

    Default Re: Electricity bills up 21%

    Quote Originally Posted by Lenscapes View Post
    Hmm - if you read between the lines, you'll see that their USD$50 forecasts are based on the "unlikely event" of a full blown global recession. That is IF their worse case scenario comes true.

    Sometimes, you'll have to take the press with a pinch of salt - they tend to report things based on a particular perspective, and take that as the absolute truth.

    Although I won't be complaining if oil prices fall, but falling to that levels would mean that we are globally in recession, which isn't a pretty thing either.

  8. #188

    Default Re: Electricity bills up 21%

    Quote Originally Posted by SNAG View Post
    It's quite interesting to see that they project oil to be at $150-ish when the market thinks absolutely otherwise.

    Would be interesting to find out on how they reached this conclusion.
    No one can predict. just an excuse to get more $$ out of peasants.

  9. #189
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by Lenscapes View Post
    Hopefully this day will come..
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  10. #190

    Default Re: Electricity bills up 21%

    Need to charge my camera and flashlight battery in office 'loh'.

  11. #191
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by blazer_workz View Post
    Hopefully this day will come..
    do you think they'll tell you it's going to be 50% reduction then?

  12. #192
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by jacob View Post
    do you think they'll tell you it's going to be 50% reduction then?
    When there is 50% unemployment..
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  13. #193
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    Default Re: Electricity bills up 21%

    I'd rather say: "MAY OIL FALL TO USD50 per Barrel"
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  14. #194

    Default Re: Electricity bills up 21%

    dont you guys know, ema hired yoda. May the farce be with them.

  15. #195

    Default Re: Electricity bills up 21%

    how come the utilities bill doesn't show the electricity old & new meter reading so that we know the amount used

  16. #196

    Default Re: Electricity bills up 21%

    Quote Originally Posted by night86mare View Post
    understandably this might not absolve all responsibility for the supposedly accused organisations - but even then, at least the situation is made clearer. and as usual, when the mindless complaining mass meets with something that appears to defy their own mentality.. it falls silent.
    It is exactly this kind of mindless statement that has caused someone to announce his retirement from Kopitiam when the surrounding pressure mounted and choked him. This happened not too long ago, hope one can still remember the sting.

    People will not complain without a good cause and what one have learnt from the textbook will not always translate into reality when it comes to people's daily lives. Lives go far beyond the four walls of the lecture room.

    When people complain about the few cents fare hike and you defended the move. This does not mean that the people who complained are mindless and you being very mindful.
    The difference between you and them is that, your transport is being paid for and complainers have to pay for the wife; three kids and the parents.
    Last edited by Silence Sky; 16th October 2008 at 07:18 PM.

  17. #197

    Default Re: Electricity bills up 21%

    Quote Originally Posted by SNAG View Post
    I think you're referring to options and not forward contracts - there is a difference. Options are "insurance premiums" that you pay to be able to buy/sell an underlying, at a particular price (termed as the strike price), sometime in the future (exercise date). In your scenario - you are able to forgo the option (just throw it away) because you merely bought a right to buy/sell the underlying at strike price.

    On the other hand, forward contracts are real contracts that you enter with another counterparty to buy/sell an underlying at a specified price in the future. There is no way to "forgo" a forward, because you have the obligation to make good your promise.

    Only way to offset this would be to unwind the forward, by entering into another forward contract with the same terms, but on the opposite direction. There is no way to "forgo" the contract just like that.
    There is confusion on my part. I all along though that hedging involved option trading.
    In this case, why do they prefer forward contract to Option trading?

    Forward contract, to me, is like buy oil at current price, take delivery at a later date and pass all the price differences to the consumer.
    Why do I need to pay top dollar for them to do their so called "hedging"?
    I think anyone in the street can do a equally good job when given proper instructions.

  18. #198
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by Silence Sky View Post
    It is exactly this kind of mindless statement that has caused someone to announce his retirement from Kopitiam when the surrounding pressure mounted and choked him. This happened not too long ago, hope one can still remember the sting.
    I definitely do remember..
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  19. #199
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by Silence Sky View Post
    It is exactly this kind of mindless statement that has caused someone to announce his retirement from Kopitiam when the surrounding pressure mounted and choked him. This happened not too long ago, hope one can still remember the sting.

    People will not complain without a good cause and what one have learnt from the textbook will not always translate into reality when it comes to people's daily lives. Lives go far beyond the four walls of the lecture room.
    as long as 1 survive, 1 will continue to post...

    Quote Originally Posted by Silence Sky View Post
    There is confusion on my part. I all along though that hedging involved option trading.
    In this case, why do they prefer forward contract to Option trading?

    Forward contract, to me, is like buy oil at current price, take delivery at a later date and pass all the price differences to the consumer.
    Why do I need to pay top dollar for them to do their so called "hedging"?
    I think anyone in the street can do a equally good job when given proper instructions.
    the person who does these hedgings never need to pay from own pocket?

  20. #200
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    Default Re: Electricity bills up 21%

    Quote Originally Posted by blazer_workz View Post
    I definitely do remember..
    Ditto that.

    I remember also.

    ../azul123

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