MALAYSIA’S new electricity tariff structure, introduced on 1 July 2025, forms part of a broader reform effort to modernise the country’s energy pricing system and support long-term sustainability objectives, according to Deputy Prime Minister and Minister of Energy Transition and Water Transformation, Datuk Seri Fadillah Yusof.
In response to a parliamentary question from Dr Mohammed Taufiq bin Johari (Sungai Petani), the Deputy Prime Minister clarified that the updated tariff structure is built upon four guiding principles: cost-reflective pricing, transparency, equitable distribution of supply costs, and minimal impact on domestic consumers.
“The updated electricity tariff schedule in Peninsular Malaysia was last revised in 2014. A review was necessary due to major developments in the electricity supply industry over the past decade,” he stated.
“The previous structure no longer accurately reflected the true cost breakdown, with 91 per cent relating to energy and just 9 per cent to fixed infrastructure.”
Under the revised model, users will now see a more detailed breakdown of charges, including energy, capacity, network, and retail costs—replacing the simpler legacy system that primarily listed energy charges and minimum fees. “This transparent structure is a first step in educating consumers to become more energy-aware and aligns with the goals of our national energy transition agenda,” he said.
Importantly, the new tariff system abandons classification based on economic activity, opting instead for a model based on voltage connection levels. This shift aims to ensure commercial and industrial users are charged rates that truly reflect the cost of supply, while preventing discriminatory pricing practices.
“This revised structure promotes sustainability by offering a fairer platform for non-domestic users and encourages them to explore renewable energy options. This is in line with our carbon neutrality commitment by 2050,” Fadillah noted.
To address concerns over affordability, the government has introduced targeted energy efficiency incentives. These include direct support for domestic users consuming 1,000 kWh or less per month, and for micro, small and medium enterprises (MSMEs) consuming 200 kWh or less. The incentives are intended to encourage responsible energy consumption while maintaining affordable bills.
“The Prime Minister has made clear that 85 per cent of users will not be affected by any increase. Domestic users consuming 1,000 kWh or less monthly will see no change to their bills—assuming their usage remains consistent—thanks to these energy efficiency incentives,” said Fadillah.
Furthermore, users consuming 600 kWh or less continue to benefit from exemptions on retail and fuel adjustment charges. This policy is designed to protect lower-income households from rising energy costs.
To mitigate public confusion and ease concerns, the Ministry, the Energy Commission (ST), and Tenaga Nasional Berhad (TNB) have issued educational infographics explaining the new components, including the Automatic Fuel Adjustment (AFA) mechanism, which replaces the earlier Imbalance Cost Pass-Through (ICPT) system.
Consumers requiring further clarification are encouraged to contact TNB’s careline for personalised assistance. - July 29, 2025
