KUALA LUMPUR – The government is expected to employ the first of its targeted subsidy strategy that will see lower income groups spared from a proposed surcharge on electricity usage, while others may see up to 7% higher charges in their monthly bills.
Rising global fuel prices may see a surcharge of up to 3.7 sen per kilowatt-hour (kWh), while those using less than 300 kWh per month will see the current 2 sen rebate retained.
The Vibes reported yesterday that five million households, or 70% of domestic consumers, that use less than 300 kWh per month or RM77 in electricity will be spared from paying more for electricity.
Putrajaya has been talking of a targeted subsidy strategy of late, especially in the wake of a strain on government finances, as well as the fact that billions spent to keep prices low – for example, electricity, fuel, toll, and selected food items – tended to benefit the higher income groups more.
It is understood that the government spent over 660 million subsidising domestic users between February and June this year, which is unsustainable in the long term.
A source told The Vibes that a targeted subsidy strategy would be fairer and be an easier sell, especially for a government with an eye on an election slated to be held latest by mid-next year.
The surcharge on electricity consumption will see a hike of between 6.5% to 7.1% higher in monthly bills, depending on usage. It will affect mostly higher users, who constitute about 30% of the 7.9 million of Tenaga Nasional Bhd’s (TNB) domestic consumer base.
The 3.7 sen per kWh surcharge had been imposed for non-domestic users for the February to June 2022 period.
With the rapid rise in global fuel costs arising from the Russo-Ukrainian conflict that began early this year, it is felt that for the first time the surcharge needs to be applied to domestic users as well. All this while, consumers have been getting rebates.
It is understood that the revised tariff will only affect household consumers in Peninsular Malaysia, Sabah, and Labuan.
Electricity rates in Sarawak will not be affected, as the electricity supply and distribution are operated by state-owned Sarawak Energy.
The groups affected are those using more than 300 kWh, with estimated increases of approximately between 3 sen a month to RM22.24 and above (refer to table).
Electricity regulators and power companies worldwide are experiencing difficulties in keeping rates at the current level, especially under the weight of rising fuel prices due to the conflict.
Coal, for example, which powers almost half of Malaysia’s power generation needs, has gone up four-fold since the war. The benchmark Newcastle coal prices hit a record high of US$440 (RM1,944.14) per tonne in early March, from US$67.50 previously.
It is understood that Putrajaya has been mulling the matter, especially on whether it would allow the cost to be passed on to consumers under a pass-through formula that looks at the cost of power generation and distribution every six months. The quantum of a rebate, or surcharge, is decided by the Energy Commission.
The Imbalance Cost Past-Through formula accords consumers either a rebate if fuel prices are low, or a surcharge when they are higher. The next review is due next month.
It is learnt that a paper on the surcharge issue was made available at the last cabinet meeting. – The Vibes, June 17, 2022
