No change in electricity tariff till end-year – with govt subsidy

KUALA LUMPUR, 30 June 2017: 

There will be no increase in electricity tariff from July 1 to Dec 31, said Minister of Energy, Green Technology and Water, Datuk Seri Maximus Johnity Ongkili.

He said the electricity tariff would be maintained at 1.52 sen per kilowatt-hour (kWh) in Peninsular Malaysia and 1.20 sen/kWJ in Sabah and Labuan.

He said in order to maintain the tariff rebate, the government has to come up with a subsidy of RM1.3 billion due to rising coal prices to generate the electricity supply for Peninsular Malaysia.

“As for Sabah and Labuan, the subsidy is some RM468 million to accommodate the rising coal prices and the generation of electricity throughout 2017.”

He said the rebate tariff for Sabah and Labuan was possible through the “Medium Fuel Oil” fuel and diesel subsidy and support subsidies by the federal government’s electricity tariff.

“The RM1.3 billion allocation for Peninsular Malaysia was by using the Power Purchase Agreement Savings Fund, a fund set-up to accumulate savings from the re-negotiation of power purchase agreements with the first- generation independent power producers.”

Ongkili said the tariff rebate was applicable to all Tenaga Nasional Bhd (TNB) consumers in Peninsular Malaysia and of Sabah Electricity Sdn Bhd in Sabah and Labuan.

He said the government has agreed to maintain an average electricity tariff at 38.53 sen/kWJ in the peninsula and 34.52 sen/kWJ for Sabah and Labuan.

The Imbalance Cost Pass-Through (ICPT), a mechanism approved by the government and implemented by the Energy Commission, has recorded an increase of 1.02 sen/kWh.

“The increase in electricity supply was due to additional gas cost by RM1.50/mmBTU (one million British thermal units to the power sector from the current RM21.20/mmBTU to RM22.70/mmBTU and the impact of foreign exchange rates on the ringgit.

“The increase  has resulted in a surcharge of 1.02 sen/kWh for customers which would be borne by the government.”

Ongkili said the adjustment of electricity tariffs upon the fuel prices and imbalanced generation has enabled users to enjoy a RM5.40 billion rebate in Peninsular Malaysia from March 2015 to December 2017.

TNB had announced the government will bear a total cost of RM1.303 billion with the ICPT subsidy of 2.54 sen/kWh, effective July 1 until Dec 31.

In a filing to Bursa Malaysia, TNB said the actual imbalance cost for the January to June 2017 period of RM523.23 million resulted in a surcharge of 1.02 sen/kWh – which was mainly due to rising coal prices in the global market and the impact of foreign exchange rates on the ringgit.

Additional gas cost of RM280 million, following the government’s subsidy rationalisation plan and decision to further increase the piped gas price by RM1.50/mmBTU to the power sector from the current RM21.20/mmBTU to RM22.70/mmBTU, was also a contributing factor, it said.

The new gas price of RM22.70/mmBTU will be effective from  July 1.

The cost to continue the current ICPT rebate of 1.52 sen/kWh would amount to RM780 million.

The government would fund the RM1.303 billion by utilising the Power Purchase Agreement (PPA) Savings Fund, which is a fund set-up to accumulate savings from the re-negotiation of power purchase agreements with the first generation independent power producers.

The objective of the PPA  savings fund was to cushion the impact on tariffs to the customers due to the fluctuation in fuel prices, it said.

This 1.52 sen/kWh rebate would be applicable to all consumers, except domestic consumers, with monthly consumption of 300 kWh and below.

The ICPT is a mechanism approved by the government and implemented by the Energy Commission, since 1 Jan 2014, as part of a wider regulatory reform called the Incentive Based Regulation.

The ICPT mechanism allowed TNB to reflect changes in fuel and generation costs in consumer’s electricity tariff every six months, subject to government’s decision and approval.

TNB also noted that the impact of the ICPT implementation was neutral on TNB and would not have any effect on the business operations and financial position.

– Bernama

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