DATA centre operators will have to bear the additional electricity and water infrastructure costs arising from their developments to prevent households, farmers and local industries from shouldering an unfair financial burden, says Deputy Prime Minister II Datuk Seri Fadillah Yusof.
He said the government was applying the user-pays and cost-causation principles to ensure large-scale consumers contributed fairly to the cost of meeting their electricity and water demands.
"The government has introduced an electricity pricing mechanism that takes into account demand levels and actual supply costs for large-scale consumers, including data centres and energy-intensive industries," he said in a written parliamentary reply published on Parliament's official website today.
He was responding to Wan Ahmad Fayhsal Wan Ahmad Kamal (PN-Machang), who asked how the government would prevent data centre expansion from increasing domestic utility tariffs and ensure operators bore the costs of upgrading infrastructure.
Fadillah, who is also Energy Transition and Water Transformation Minister, said the government had strengthened the Connected Load Charge (CLC) mechanism by increasing related charges to discourage operators from declaring electricity requirements beyond their actual needs.
The mechanism is intended to ensure requested electricity capacity is used efficiently, prevent unnecessary grid expansion and improve supply planning.
He said the Ultra High Voltage (UHV) tariff category, introduced on July 1, 2025, also covered large-scale consumers, including existing and new data centres.
The category applies to consumers receiving electricity at voltages above 50 kilovolts (kV) up to 230kV, as well as those supplied at voltages exceeding 230kV.
For water infrastructure, developers are required to contribute capital towards the construction and upgrading of treatment facilities and distribution networks identified by water operators.
They must also submit estimated monthly water demand for their first six years of operation.
Fadillah said the Water Supply Guidelines for Data Centre Development, effective Sept 1, 2025, set a Water Usage Effectiveness benchmark of no more than an estimated 2.2 cubic metres per megawatt-hour.
The guidelines also encourage the use of recycled water and rainwater harvesting for cooling to reduce reliance on treated water.
He said the average water tariff for data centres was RM5.30 per cubic metre, with tariff structures distinguishing between domestic and industrial consumers.
On the cost of upgrading electricity grids, water treatment plants and pipelines, Fadillah said each operator's contribution would depend on its capacity requirements, development location, existing infrastructure and the improvements needed.
He stressed that there was no uniform charge for all data centre projects, as costs were determined through technical assessments and relevant financing mechanisms.
Any electricity and water tariff adjustments would remain subject to regulatory reviews that considered actual supply costs, public affordability and the country's economic well-being. - November 4, 2026
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