KUALA LUMPUR – The weekly cabinet meeting today has discussed the impending surcharge on domestic consumers’ electricity bills, with the revised tariff expected to come into effect next month.
According to a source familiar with the matter, the cabinet paper was tabled by the Energy and Natural Resources Minister Datuk Seri Takiyuddin Hassan.
This signifies another major step in the government’s bid to rationalise the electricity tariff amid the soaring cost of fuel.
The Vibes is made to understand that the paper was prepared by the Energy Commission (EC), a statutory body responsible for regulating the energy sector in Peninsular Malaysia and Sabah.
“All I can say is that (the) paper was tabled today and the cabinet has deliberated on the matter,” the source said.
“But that’s as far as I can divulge to you,” he said, without elaborating further.
Attempts to contact Takiyuddin for comments over the matter remained futile, as at time of publication.
The Vibes earlier reported that household consumers are expected to be imposed a surcharge on their electricity bills next month due to rising fuel prices arising from the Russia-Ukraine conflict, which began early this year.
Electricity regulators and power companies worldwide are experiencing difficulty in keeping rates at the current level, especially under the weight of rising fuel prices.
The price of coal, for example, which powers almost half of Malaysia’s power generation needs, has gone up four-fold since the war.
For instance, the benchmark Newcastle coal prices hit a record high of US$440 (RM1,945) per tonne in early March, from US$67.5 previously, fueled by fears of a supply shortage as Western countries enforced sanctions on Russia’s financial system and energy products after the country’s attack on Ukraine.
Another source, who spoke to The Vibes on strict condition of anonymity, revealed that Putrajaya is mulling over the matter, especially on whether it would allow the cost to be passed on to consumers.
For context, there is an Imbalance Cost Pass-Through (ICPT) formula, which is reviewed every six months, where the cost of fuel could be translated into the final consumers’ bills.
The next ICPT review is due next month.
While a surcharge has been applied to commercial users, this is the first time it would be implemented for domestic consumers. The quantum of the surcharge would be decided by the EC.
All this while consumers have been getting rebates.
The government decided in January that the tariff would remain at 39.45 sen/kWh, and domestic consumers would continue to enjoy a rebate of 2 sen/kWh without any surcharge.
The EC in January said the government had utilised available funds amounting to RM715 million from Kumpulan Wang Industri Elektrik, made up of cess-like contributions from power players, to maintain the current rebate for domestic users.
According to Tenaga Nasional Bhd’s (TNB) website, the ICPT mechanism under the Incentive-based Regulation (IBR) framework allows TNB to reflect changes, either an increase or a reduction, in fuel and other generation-related costs in the electricity tariff every six months.
Through the ICPT mechanism, the government stipulates that in the case of a drop in global fuel prices and generation costs, the savings will be returned to the public in the form of an ICPT rebate, and in the event of an increase in fuel and generation costs the extra costs will be channelled as an ICPT surcharge. – The Vibes, June 15, 2022
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