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Home › Contact Us › Customer Self-Help › What to Look Out for in the Contract
There are a few things that can get tricky in an electricity contract. Very often, at a first glance, rates offered by the electricity retailer can look really attractive. But is it really what it seems? We have listed a few areas you should look out for before you ink your company’s electricity contract.
From the point electricity is generated until it is transmitted to your company premise, there are units that are lost along the power grid. This is a cost that is applicable to all contestable consumers and the percentage tagged to this loss is determined by MSSL. This percentage is typically around 4% and is reviewed on an annual basis every April.
There are two ways a retailer can bill you for this transmission loss on your electricity rates – metered rate and loss-adjusted rate.
Metered rates may look higher in unit price, but your usage as captured on your meter will be as charged in your electricity bill.
Loss-adjusted rates will seemingly be cheaper in unit price, but your usage as reflected on your electricity bill will comprise of the additional units lost in transmission.
Essentially, no matter how the electricity retailer charges you (metered rate or loss-adjusted rate), you will be charged for the transmission loss. However, it is important to take note that you should be doing a fair comparison between the different quotes you receive.
Bundled rate refers to the electricity rates and the inclusion of third party charges like service and admin charges. To use the grid network for electricity transmission, there are compulsory costing like EMC Charges, PSO and Market Support Services Charges imposed by the regulators. As a guide, these third party charges are approximately 25% of your total bill.
There have been cases of consumers who have signed up with other retailers on irresistible rates, only to realise that their plans were on unbundled pricing. A retailer may be giving you extremely attractive electricity rates which can be a genuinely good offer. From Seraya’s professional point of view, as a consumer you should be vigilant to confirm if rates are bundled.
On the contract, you should also look out for hidden costs that may not be apparent as first glance, but are factored in the contract. Hidden costs can be items like AMI metering charge and retail service charge.
We strongly believe in upfront communication with our customers and our team always make sure that you are well-aware of these additional charges before committing to an electricity plan with Seraya Energy.
One thing to look out for in your proposal is the validity of the offer. Electricity prices are tagged to oil prices and may change after the offer expires. The oil which is used to generate electricity is 180 CST High Sulphur Fuel Oil (HSFO). Electricity prices may also be revised if oil fluctuations occur during the validity period. It is important to make sure that your electricity retailer gives you a written acknowledgment to confirm the acceptance of your signed proposal.
An electricity contract comes with a contractual period, which is typically 1, 2 or 3 years. Before you sign any electricity contract, you should check and ensure that your premise lease expiry is longer than your electricity contract duration. You also can get your Seraya account manager to tailor the proposal in line with your lease expiry date.
There may be unforeseen circumstances where you have to do an early termination for your contract with Seraya Energy. A good example will be the management’s sudden decision to move business facility to offshore locations. In such situations, there will be a liquidated damage incurred for the premature termination of your contract. This charge is due to the fact that Seraya Energy does all oil hedging for your full contract duration at point of contract confirmation.
A rough gauge of this cost will be 40% X No. of remaining months to the end of your contract X Average Monthly Bill.
It is important to note that all electricity contracts with Seraya Energy are purely financial. Seraya Energy does not provide your physical electricity supply and our role in this contractual agreement is to lock in your electricity prices where you get to Pay Less For Electricity with Seraya Energy. The transmission are solely managed by Singapore Power PowerGrid and any physical set-up issues should be directed to them.