TJC_H2_ECON_P1

TEMASEK JUNIOR COLLEGE Preliminary Examination 2011 General Certificate of Education Advanced Level Higher 2 ECONOMICS Paper 1 9732/01 Wednesday 14 September 2011 2 hours 15 minutes Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Do not turn over until you are told to do so. Write your name and CG number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. Begin each question on a separate sheet of answer paper. At the end of the examination, fasten your work for each question separately. Hand in your answer to each question separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages. © TJC 2011 [Turn Over]

2 Answer all questions. Question 1 The Energy Market Figure 1: Fuel vs Non-Fuel Cost Components in Electricity Tariff (Price) www.ema.gov.sg Note: The fuel cost or the cost of imported natural gas is tied to the price of fuel oil by commercial contracts The non-fuel cost reflects the cost of generating and delivering electricity to our homes. Extract 1: Singapore Electricity Market Underscoring the importance of freeing up the electricity market, Minister for Trade and Industry Lim Hng Kiang said that this 'has always helped keep power prices low'. And this is why competitive markets will remain 'a cornerstone' of Singapore's energy policy, added Mr Lim, who was at the opening of the Singapore Electricity Roundtable at the Raffles City Convention Centre. About a decade ago, the Public Utilities Board was the sole provider of all electricity services in Singapore. The Government then restructured the industry, separating the generating of power from its distribution and also from the sale of power by the electricity retailer to the end consumer. The business of power generation was first liberalized and this saw the establishment of several privately owned power generation companies such as Tuas Power and PowerSeraya. These companies were free to choose their own means of generating power. And the diversification of energy sources led to lower electricity bills as generation companies looked for more energy- efficient means of power production, explained Mr Lim. So far, businesses - which account for about 75 per cent of Singapore's total energy consumption - have been reaping the most gains fr om competition. This is because they can

3 buy their power directly from power co mpanies, whereas Singapore households (in the non- contestable market) must buy their power from one electricity retailer: SP Services. The next stage of liberalisation will therefore allo w consumers to buy from retailers other than S