Global Benchmark Study of Residential Electricity Tariffs

Transcription

1 Final Report Prepared For: Energy Market Authority Singapore Global Benchmark Study of Residential Electricity Tariffs Prepared By: The Lantau Group (HK) Limited Tower 1, Metroplaza 223 Hing Fong Road Kwai Fong, Hong Kong Date:

2 CONTENTS 1. EXECUTIVE SUMMARY INTRODUCTION COMPARATOR GROUP COMPONENTS GENERAL COMMENT SUMMARY OF FINDINGS INTERNATIONAL COMPARISONS Overall Energy Cost Component Network Cost Component OTHER FACTORS AFFECTING SINGAPORE S RANKINGS Subsidies Taxation Policy SUMMARY APPENDIX A : METHODOLOGY SUMMARY A.1 SELECTING THE UTILITY WITHIN EACH COMPARATOR CITY A.2 IDENTIFYING AND CALCULATING APPROPRIATE TARIFFS A.3 SUPPLY CHARACTERISTICS A.4 OTHER ASSUMPTIONS A.5 BREAKDOWN OF TARIFF INTO COMPONENT COSTS A.5.1 Cities Served via Competitive Markets A.5.2 Overview of Cities Served by a Vertically Integrated Utility... 18

3 FIGURES Figure 1: Overall comparison... 1 Figure 2: Singapore s residential electricity tariff Q by component... 5 Figure 3: World city residential tariff and its components January Figure 4: Comparison of energy (generation) costs... 7 Figure 5: Fuel mix sorted in order of ascending energy costs of benchmark sample cities... 8 Figure 6: Gas prices in North America, UK and Singapore... 9 Figure 7: Comparison of grid charges Figure 8: Ratio of selected residential tariff compared to selected commercial electricity tariff for selected cities Figure 9: VAT/GST rate applicable to residential electricity consumption January TABLES Table 1: Comparator cities... 2 Table 2: Estimation of natural gas price impact on retail tariff... 9 Table 3: Matching service provider/retailer to city Table 4: Cities operate in competitive retail market with unbundled and bundled retail prices Table 5: List of cities serviced by a vertically integrated utility... 18

4 1. EXECUTIVE SUMMARY The Lantau Group (HK) Limited was engaged by EMA to conduct a benchmarking study to compare Singapore s electricity price for households applicable in January 2013 against 31 other cities around the world. The study places Singapore s overall residential electricity tariff in context against a diverse group of world cities with a range of fuel mix, system sizes, geographic locations, and market and regulatory structures. Singapore s residential electricity tariff is middle-ranked, at per kwh (inclusive of GST), which falls below the sample median of 33.5 per kwh. Singapore s residential electricity tariff fares well against cities in Europe, North America and Oceania. However, it is more expensive than the majority of cities in Asia, with the exception of Manila and Tokyo. Figure 1: Overall comparison SGD /kwh Fuel costs in other cities typically reflect the use of a broad fuel mix, often incorporating lower cost local sources of hydropower, coal-fired generation, or nuclear power (often from stations built decades ago). In contrast, Singapore relies heavily on natural gas for power generation. Currently, the market price of natural gas to Singapore is much higher than the corresponding prices of natural gas in Europe and North America. On the other hand, Singapore benefits from lower network-related costs and lower applicable taxes, particularly relative to European cities. Final Report Page 1

5 Residential electricity tariffs in several benchmarked Asian cities sample are lower than they would otherwise be, due to material subsidies in various forms, such as subsidized fuel prices, absorbed losses of state-owned utilities, or cross-subsidization by other customer groups. In contrast, Singapore is committed to the regulatory principle of costreflectivity, as commonly found in regulatory regimes throughout the developed world. 2. INTRODUCTION We conducted a study comparing Singapore s residential customer electricity tariff against 31 other cities around the world. For each city, we calculated and compared the tariff applicable to a residential customer with an electricity demand of 400 kwh per month, the approximate average usage level of a Singapore household COMPARATOR GROUP Table 1 summarises the 32 cities in the benchmark sample in terms of their approximate reliance on natural gas for power generation; their respective system sizes; and whether the applicable regulatory regime incorporates key elements of a wholesale power market or power exchange. Table 1: Comparator cities 1 Cities Asia Pacific Rest of World Percent Natural Gas System Annual Electricity Consumption (TWh) Power Exchange or Wholesale Power Market Singapore X 84% 42 Yes Melbourne, Sydney, Adelaide X 9% 148 Yes Perth X 57% 32 Yes Vienna X 20% 70 Yes Brussels X 33% 91 Yes Beijing, Shanghai X 2% 3,938 No Hong Kong X 23% 42 No Copenhagen X 20% 35 Yes Munich, Frankfurt X 14% 590 Yes Jakarta X 24% 154 No Dublin X 62% 27 Yes Rome X 51% 326 Yes Tokyo X 27% 1,070 Yes Kuala Lumpur X 57% 117 No Amsterdam, Rotterdam X 63% 116 Yes 1 Source: TLG Research, World Bank, IEA Electricity Information 2012 (2010 data). Note that Japan gas use data is based on data from the Japan Electric Power Information Center (JEPIC) 2011 Statistical Yearbook and does not reflect the post-fukushima shut down of most of Japan s nuclear power stations, pending on-going review. The Philippine fuel mix is estimated by TLG based on the generation mix on the island of Luzon, only, as that is where Manila is located. Final Report Page 2

6 Cities Asia Pacific Rest of World Percent Natural Gas System Annual Electricity Consumption (TWh) Power Exchange or Wholesale Power Market Auckland X 22% 42 Yes Manila X 63% 60 Yes Seoul X 21% 481 Yes Taipei X 23% 238 No Bangkok X 75% 155 No Madrid X 32% 284 Yes Stockholm X 2% 140 Yes Zurich X 2% 64 Yes London X 46% 357 Yes New York, Los Angeles X 23% 4143 Yes Hanoi X 46% 90 No 32 Cities 17 Cities 15 Cities 2.2. COMPONENTS We compared overall residential tariffs across the cities. We also derived four functional elements that together form the total residential tariff: Energy costs; Grid charges; Other charges and fees; and Applicable taxes. Energy costs refer to the costs of generating electricity. These include fuel costs; capital and operating costs of power stations; market charges for ancillary services; network losses; and applicable generation-related carbon taxes. Network costs refer to the costs of the transmission and distribution networks to deliver electricity to end-users. Other costs include retail-related costs such as market support services, power system operator costs, market operator costs and, depending on the city, a variety of miscellaneous fees or charges. Applicable taxes are then added to the above costs to derive the overall electricity tariff. 2 2 The appendix provides additional details on the methodology used to break down each city s overall tariff into specified components. Final Report Page 3

7 2.3. GENERAL COMMENT No single tariff type or structure is the unequivocal best for use in a global comparison across cities. Tariff structures differ across cities. Furthermore, multiple tariffs types may be available to some customers. Discounts or surcharges may apply in certain circumstances. The average residential customer in different cities will have different usage patterns and requirements. Different metering technologies may be available to some customers. It is therefore possible that some customers within the same overall tariff eligibility class may be able to achieve a tariff or overall cost result that is slightly higher or lower than what has been selected and compared. The appendix provides additional information concerning the selection of the corresponding utility, the identification and calculation of appropriate tariff, and assumptions regarding customer supply characteristics, the applicability of seasonality adjustments, and choice of payment method. Final Report Page 4

8 3. SUMMARY OF FINDINGS Singapore s residential tariff for the 1 st Quarter of 2013 is set at SGD per kwh (inclusive of GST), of which energy cost accounts for over 75 percent, network charges about 17 percent, taxes about 7 percent, and other charges (which include power system operator fees, market operator fees and market support services charges) account for the remainder (approximately 1 percent), as shown in Figure 2. Figure 2: Singapore s residential electricity tariff Q by component SG /kwh /kwh GST 7% Grid Charge 4.78 /kwh Other charges: MSS Fee 0.22 /kwh EMC/PSO Fees 0.05 /kwh Energy Cost /kwh Q Source: EMA 3.1. INTERNATIONAL COMPARISONS Overall As shown in Figure 3, Singapore is middle-ranked with a residential electricity tariff of per kwh, which falls below the sample median of 33.5 per kwh 3. Singapore compares favourably to cities in Europe, North America and Oceania. However, Singapore s residential electricity tariff is higher than the majority of cities in Asia, with the exception of Manila and Tokyo. 3 The median is calculated as the average of Auckland s and Amsterdam s tariffs. Final Report Page 5

9 Figure 3: World city residential tariff and its components January 2013 SGD /kwh 60 Energy cost Grid charges Other charges Taxes Energy Cost Component The energy cost component refers to the costs of generating electricity. These costs include fuel costs; capital and operating costs of power stations; market charges for ancillary services; network losses; and applicable generation-related carbon taxes. Singapore s energy cost component of its residential tariff is second only to Tokyo, as shown in Figure 4. Final Report Page 6

10 Figure 4: Comparison of energy (generation) costs SGD /kwh Singapore s higher energy cost reflects a combination of factors, including Singapore s dependence on a costlier fuel mix compared to other cities in the sample. Singapore uses the highest proportion of natural gas for electricity generation of all the cities in the sample. Currently, natural gas costs much more in Asia than in the US or Europe. Most cities in the sample have benefited relative to Singapore from lower natural gas prices in their respective regions or from a fuel mix that includes locally sourced hydro or coal generation or nuclear power. In Figure 5, we rank the cities in our sample in ascending order of their energy costs, and then summarise available information about the corresponding system-level fuel usage. Final Report Page 7

11 Figure 5: Fuel mix sorted in order of ascending energy costs of benchmark sample cities 4 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Hydro Other Renewables Nuclear Coal Natural Gas Oil Other Figure 6 highlights a measure of the price difference between Singapore s pipelinesupplied natural gas (designated PNG ) and natural gas sold at either the UK s National Balancing Point ( NBP ) or the US Henry Hub ( HH ) gas markets. 4 Note that city level data on fuel mix is not always available. In such cases data aggregated at a higher level (e.g., state or regional) may be used to illustrate the fuel mix. Sources: IEA Electricity Information 2012 (2010 data), Japan Electric Power Information Centre 2011 Statistical Yearbook (2011 data), EIA Electric Power Annual (2011 data), 2012 Australian energy statistics (2011 data). Note that Japan has since shut down most of its nuclear power generation. The Philippine fuel mix is estimated by TLG based on the generation mix on the island of Luzon, only, as that is where Manila is located. Final Report Page 8

12 Figure 6: Gas prices in North America, UK and Singapore Source: Bloomberg Based on 4Q2012 average natural gas prices in the three regional pricing areas (Asia, Europe and North America), we recalculated a hypothetical Singapore electricity price in Table 2. The results are purely illustrative to provide perspective on the impact on Singapore of current global gas market price differentials. Table 2: Estimation of natural gas price impact on retail tariff Components ( /KWh) Singapore PNG UK NBP US Henry Hub Energy Charge Grid Charge 4.78 Other 0.27 Tariff before Taxes Tax Total Tariff Percent Difference - 23% - 46% Source: EMA and TLG estimation Final Report Page 9

13 Network Cost Component Network costs refer to those costs incurred by the transmission and distribution networks used to deliver electricity to end-users. Singapore s network-related ( Use of System or Grid ) charges, though higher than those found in other Asian cities, are much less expensive than cities in Europe, the US, or Oceania, as shown in Figure 7. Figure 7: Comparison of grid charges SGD /kwh Singapore s grid-related charges per kwh have been falling over the past decade. According to data from EMA, Singapore s grid charges in January 1999 were 38 percent higher than current grid charges OTHER FACTORS AFFECTING SINGAPORE S RANKINGS A number of other factors affect Singapore s overall rankings. Two, subsidies and taxation policies, in particular, have notable impacts on Singapore s relative ranking Subsidies Singapore is one of the few cities in Asia (the others being Tokyo, Hong Kong and Manila) that do not embed subsidies in its electricity pricing. Singapore adheres to the principle of cost-reflectivity in its electricity tariffs; a regulatory principle commonly adopted throughout the developed world. As a consequence, Singapore s electricity tariffs will appear higher relative to tariffs in cities where the price of electricity does not reflect all associated costs. Final Report Page 10

14 Unsustainable Financial Performance A relatively common form of subsidy happens when a utility consistently loses money, or earns a below market financial return, but is able to operate anyway because it is able to draw on either direct or indirect taxpayer funds for the required power system investment. Three illustrative examples 5 : Taipower, Taipei s sole vertically integrated utility, made a loss of NT$62.1 bn (~S$2.62 bn) before income tax in 2012, selling electricity at an average price of NT$2.7222/kWh, 10.5 percent below unit cost of sales at NT$3.0401/kWh. 6 KEPCO, South Korea s transmission, distribution and retail monopoly serving Seoul, made a loss of KWR 2,473bn (~S$2.97bn) before income tax in 2011 with tariff set at a level that recovers an estimated 87 percent of its estimated cost of supply, on average. 7 PLN, the Indonesian utility serving Jakarta, has received direct support from the Indonesian Ministry of Finance directly as a result of electricity tariffs that are below PLN s costs. Indonesia has announced intentions to reduce or eliminate electricity subsidies in the future. The residential electricity prices in several Asian cities in the global sample are lower as a result of this form of subsidy. Below Market Fuel Costs In some cities, a key primary fuel for the power sector is provided at a price below the market rate, particularly when the country has indigenous sources of fuel that are sold through government-owned entities. For example, in Malaysia, electricity is indirectly subsidized through a mechanism by which Petronas sells natural gas to the power sector at a price below what it sells natural gas to other sectors. Similar subsidies exist in Thailand where gas is sold to the power sector at regulated prices below market rates. 5 Such subsidies are likely to account for only a part of the overall subsidy. Few Asian utilities are able to earn full market-based returns such that losses are determined based on accounting standards rather than economic or commercial standards meaning that a sustainable, market-based, return on equity component may not be fully accounted for. 6 Taipower 2012 Statement of Profit and Loss; Taipower Q fuel cost report 7 The South Korea s Ministry of Knowledge Economy (the regulator of the South Korean electricity sector) estimated at the end of 2011 that only 86.4 percent of the costs attributable to electricity supply to residential customers were recovered in tariffs charged to those customers. Recovery Rate Residential Commercial Industrial Education Agriculture Streetlight Average Dec % 90.8% 88.7% 83.9% 32.8% 78.3% 87.0% % 124% 118% 92% 40% 83% 102% Source: Ministry of Knowledge Economy Final Report Page 11

15 Customer Class Cross-Subsidisation Electricity prices to residential customers can reflect policies aimed to allocate higher or lower costs to other customers. In general, a cross subsidy arises when a customer class pays materially more or less than the estimated costs-to-serve for that customer class. If a customer class pays more than the corresponding cost-to-serve, then that customer implicitly cross-subsidises other customer classes, and vice versa. We collected commercial tariff data for a subset of cities to compare residential tariffs to tariffs for small commercial customers (using 3,000 kwh per month). The ratio of the residential tariff to commercial tariff provides insight into underlying practices with respect to cost allocation and tariff setting. Figure 8: Ratio of selected residential tariff compared to selected commercial electricity tariff for selected cities 8 Beijing Kuala Lumpur Taipei Shanghai Hanoi Jakarta Madrid Bangkok Hong Kong Sydney Singapore Berlin Paris Lisbon London New York Helsinki Brussels Tokyo Seoul Amsterdam Rome Wellington Source: TLG Analysis The majority of cities with ratios above Singapore s have regulatory regimes consistent with cost-reflectivity principles the idea that tariffs should reflect the costs associated with the service received. Many of the cities with ratios below Singapore s have regulatory arrangements that either do not recover the full costs of electricity supply through tariffs, or do not implement cost-reflective tariffs such that commercial customers crosssubsidise residential customers. 8 The residential electricity tariff is based on consumption of 400kWh per month; the commercial electricity tariff is based on consumption of 3,000kWh per month at low tension. Final Report Page 12

16 Taxation Policy Across cities in the sample, taxation of electricity varies widely, with values ranging from no taxation (as in Hong Kong) to relatively heavy taxation (as in Copenhagen and Stockholm), as shown in Figure 9. Figure 9: VAT/GST rate applicable to residential electricity consumption January Percent Singapore s GST at 7 percent is within the lower quartile along with other Asian cities such as Hong Kong, Taipei, Tokyo and Bangkok. Apart from the standard VAT and GST applicable to electricity consumption, a number of cities, especially in Europe, have imposed taxes for the purpose of promoting energy efficiency (and thus reducing emissions) or recovering the costs associated with various green schemes, such as feed-in-tariffs for renewable energy. Such taxes are ultimately borne by consumers through higher tariffs SUMMARY Singapore s overall residential electricity tariff falls near the middle of the benchmark sample as a result of a combination of relatively higher energy costs and relatively lower grid charges, other charges and taxes. The main driver of Singapore s residential electricity tariff is the cost of natural gas in Asia, given Singapore s high degree of reliance on natural gas for power generation. In comparing Singapore s electricity tariffs to those in other Asian cities, it is important to bear in mind that Singapore is one of the few cities in Asia (the others being Tokyo, Hong Kong and Manila) that do not embed subsidies in its electricity pricing. Final Report Page 13

17 APPENDIX A: METHODOLOGY SUMMARY A.1 SELECTING THE UTILITY WITHIN EACH COMPARATOR CITY Table 3 summarises the approach taken to identify the relevant entity serving residential customers in each city. Where retail competition is not applicable, such as in many Asian cities, we selected the incumbent utility serving all residential customers in the area. Where retail competition has been introduced, we selected either the largest electricity retailer (by number of customers) or the historically dominant retailer before full retail competition was introduced. In Madrid, the choice of retailer was not relevant, as a common regulated retail tariff applies. Table 3: Matching service provider/retailer to city Largest retailer Incumbent Utility Franchised monopoly Melbourne, Australia Adelaide, Australia Beijing, China Sydney, Australia Munich, Germany Shanghai, China Perth, Australia Frankfurt, Germany Hong Kong SAR, China Vienna, Austria New York, USA Jakarta, Indonesia Brussels, Belgium Copenhagen, Denmark Dublin, Ireland Rome, Italy Amsterdam, Netherlands Rotterdam, Netherlands Auckland, New Zealand Manila, Philippines Tokyo, Japan Kuala Lumpur, Malaysia Seoul, South Korea Taipei, Chinese Taipei Bangkok, Thailand Zurich, Switzerland Los Angeles, USA Hanoi, Vietnam Madrid, Spain Stockholm, Sweden London, UK A.2 IDENTIFYING AND CALCULATING APPROPRIATE TARIFFS Where different residential tariff classes exist in a given city, we chose the simplest (usually single rate) tariff available in order to provide a common basis for comparisons across cities, subject to the guidelines set out below. 1. In some instances, special tariffs are available for customers with special meters. We select the standard or simpler tariff that does not require a special meter. Final Report Page 14

18 2. In some instances, customers can choose to have both gas and electric service from the same provider, via a special dual-fuel plan. Where single and dual fuel plans are both available, we assume the characteristic customer adopts the power-only price plan, and do not account for the small savings potentially available via a dual fuel account. 3. We ignore non-standard, special discounts such as online-only offers or switching bonuses that may be available from time to time. We select the corresponding standard tariff offerings for the characteristic customer. 4. Where special discounts might be available for specific payment methods, such as direct debit, we report the tariff before application of any special discount. However, we assume that customers pay their bills on time and thus we include any standard discount associated with timely payment. 5. We assume that the characteristic customer is not in a position to take advantage of special load control or demand response tariffs. 6. We assume that the typical customer is not eligible for special renewable energy related tariffs that depend on customer investments in renewable energy infrastructure. 7. In markets where customers have an option to choose between a regulated tariff rate and a market contract, we use the regulated tariff if it appears to represent the majority of customer contracts. For example, in some instances, the vast majority of customers remain on regulated tariffs even when retail competition is available. However, in other instances, such as Adelaide, where the regulated tariff serves as an effective price cap, we have compared the offerings and used the lowest priced offer subject to guideline 8 below. 8. In markets where customers have an option to choose among a range of competing electricity offers in the absence of a regulated tariff rate, we used the lower of a fixed price contract of one year or less in duration and a variable energy price contract. A.3 SUPPLY CHARACTERISTICS Some jurisdictions require that we make specific assumptions regarding characteristic customer supply parameters for demand, voltage, power limit and reactive energy to identify the appropriate tariff class. In Tokyo, the tariff rate depends on the type of circuit breaker used. We have assumed that a residential customer uses a 50 Amp circuit breaker, corresponding to an average of monthly consumption of 450kWh, closest to the assumed 400kWh per month consumption in the study. Where a demand-based tariff component exists, we assumed the contracted maximum demand of 6 kw for calculating tariffs in Rome, Brussels and Madrid. Final Report Page 15

19 Where a power limit based tariff component exists, we assumed the apparent power limit to be greater than 5.5kVA for identifying tariff in Jakarta. Where a voltage based tariff component exists, we assumed the voltage level to be less than 1kV for identifying the relevant tariffs in Beijing and Shanghai. A.4 OTHER ASSUMPTIONS In addition to the various demand and consumption parameters used to calculate the annual electricity bill for the characteristic residential and commercial customer, we needed to make several additional assumptions in specific instances. In cities where the tariff rates differ seasonally, such as New York, Los Angeles, Adelaide and Taipei, we calculated a monthly consumption weighted average tariff rate. In the absence of more specific data, we used monthly or quarterly sales volume patterns as disclosed by the respective utility companies. In Zurich where there is only Time-of-Use tariff available, we applied the usage profile as used in the utility s bill stimulation tool for a typical household with a monthly consumption of 375kWh, which is closest to Singapore s 400kWh monthly usage. We assume that the customer pays their electricity bill on time (promptly) and does not incur late payment costs. Therefore, a 10 percent discount is applied to Auckland s bill, while for Sydney and Melbourne, we applied a 3 percent pay by due date discount. In determining applicable taxes applied to the total electricity bill, we have replicated, where available, sample bills that were found on the utility s website. To convert the local currency tax bill into a SGD equivalent, we have used the January 2013 monthly average of midpoint of bid and ask exchange rates available from A.5 BREAKDOWN OF TARIFF INTO COMPONENT COSTS A.5.1 Cities Served via Competitive Markets A number of jurisdictions have a competitive electricity retail market in which retail prices are constructed from unbundled components that align well with EMA s specified cost components, namely energy cost, grid charge, other charges (Market Service Surcharge, renewable surcharge and other miscellaneous charges) and taxes. In other instances, we must map costs to each functional area using a combination of utility reported tariff structures, regulatory reports, annual reports and other sources. Final Report Page 16

20 For example, Eneco Energia s single meter, variable residential tariff applicable in Amsterdam breaks most cost components down in a way that can be mapped directly to Singapore s tariff structure. The market operator charge, however, must be estimated based on the market operator s (APX ENDEX) fee table and Eneco s annual report. System operator charges must be estimated based on the system service charge determined by the Dutch Competition Authority (Nma). Unbundled regulated components, in particular the Use-of-System transmission and distribution charges can be determined from tariff tables available from the network owner, operator or regulator. We must then determine how to apply the tariff table information to develop the estimate of applicable proportion for the end user tariff. As the retailer may have some flexibility in how it chooses to allocate and recover such costs from each customer class, the specific estimate of costs reflected in a given tariff involves judgment. Energy and retail cost components are competitive in the market with open retail competition, and vary across utilities with different energy procurement strategies, generation fuel mix, and customer mix. For cities with a regulated retail price such as Adelaide, a breakdown of these costs for a specific utility is available from regulator price determination reports. Alternatively, an indicative, high-level proportion of these cost components is sometimes disclosed by the regulator for informational purposes, as is done in the UK and New Zealand. Table 4 categorises cities operating under a competitive retail market framework into two groups. The first group contains cities with an unbundled retail price where a direct mapping of component costs is applied. The second group contains cities with a bundled retail price where regulated components are separately identified and estimated. Table 4: Cities operate in competitive retail market with unbundled and bundled retail prices Cities with unbundled retail price New York, USA Manila, Philippines Brussels, Belgium Vienna, Austria Rome, Italy Amsterdam, Netherlands Rotterdam, Netherlands Zurich, Switzerland Cities with bundled retail price and regulated component cost Sydney, Australia Melbourne, Australia Perth, Australia Adelaide, Australia Copenhagen, Denmark Munich, Germany Frankfurt, Germany Dublin, Ireland Auckland, New Zealand Madrid, Spain Final Report Page 17

21 Cities with unbundled retail price Cities with bundled retail price and regulated component cost Stockholm, Sweden London, UK Los Angeles, USA A.5.2 Overview of Cities Served by a Vertically Integrated Utility Where electricity is provided through a vertically integrated utility, the overall tariff often reflects all costs bundled together. In some cases, such as Beijing, Hanoi and Bangkok, regulators publish reports outlining the breakdown of such costs for informational purpose. In most other cases, we construct estimates based on the operating expense section of the relevant utility s annual report. Table 1 lists cities serviced by vertically integrated monopolies. Table 5: List of cities serviced by a vertically integrated utility City Beijing, China Shanghai, China Hong Kong SAR, China Bangkok, Thailand Hanoi, Vietnam Jakarta, Indonesia Tokyo, Japan Kuala Lumpur, Malaysia Seoul, South Korea Taipei, Chinese Taipei Inconsistencies are common in the way utilities across jurisdictions report their expenses. In cases where component expenses are available, such as TEPCO (Tokyo) and KEPCO (Seoul), energy cost, grid costs, and retail costs are estimated as a percentage of the total tariff from the proportion of their respective expenses over total operating expenses. Final Report Page 18