Kota Marudu Member of Parliament

Government cannot guarantee no electricity tariff hike - Ongkili

KUALA LUMPUR (May 18): The government cannot guarantee that the electricity tariff will not increase, but the government has mechanisms to ensure any tariff hikes will not burden the consumer through savings from the renegotiation of Power Purchase Agreement (PPA) with the independent power producer (IPP).

Energy, Green Technology and Water minister Datuk Seri Maximus Ongkili said the electricity tariff for the Tenaga Nasional Bhd (TNB) users in Peninsular Malaysia was determined by the incentive-based regulation (IBR) framework, which entails two main components, namely basic tariff and Imbalance Cost Pass-Through (ICPT) mechanism.

He said the basic tariff takes into account of the basic fuel price and operation cost, as well as the development of the utilities including Return on Regulated Asset Base (RORB), while the ICPT allows all the fuel cost to be standardised every six months to ensure users pay the actual fuel cost.

Maximus added that any increase or decrease of cost will be passed through to consumers through a review of every six months. Both tariff components will decide the actual sum of the bill to be paid by consumer to Tenaga Nasional Bhd (TNB).

"Therefore, any adjustment to the tariff rate, whether to increase or decrease, will depend on the two tariff components, especially the ICPT component because this involves the fuel cost that changes according to the market price, except for piped gas that was controlled by the government," Maximus said in a written reply to Kuala Selangor MP Datuk Irmohizam Ibrahim.

Irmohizam asked the minister to state the government's efforts to ensure that electricity tariff are not increased and whether the government's achievement of providing rebates three times last year and this year were through the savings from the PPA and review mechanism of ICPT.

The electricity tariff for domestic and industrial consumers in Peninsular Malaysia is maintained at 38.53 sen per kilowatt-hour (kWh), but the tariff rebate is reduced to 1.52 sen per kWh compared to 2.25 sen per kWh from July to December 2015.

He said that through the ICPT mechanism, the government has given a electricity tariff rebate amounted to RM2.57 billion for the period between March 2015 and June 2016 for three times.

This includes a rebate of 2.25 sen/kWh from March to June 2015, a rebate of 2.25 sen/kWh from July to December 2015, part of this rebate was borne by the fund collected from the renegotiation of PPA with the first generation IPP amounting to RM300 million; and 1.52 sen/kWh from January to June 2016.

"The rebate clearly shows the government is always trying to ensure the electricity tariff fixed for the consumer has taken into account actual cost of supplying the electricity; and any increase or decrease of the electricity tariff is because of the fuel cost, which constitute the main component of setting the electricity tariff," he added.

Meanwhile, the minister also said the government does not propose to give discount for electricity bill to users, due to hot weather.

"On the contrary, to reduce the impact of the increase of the electricity bill due to higher consumption, the users are advised to be more energy effective. Among the measures that could be taken include using energy-effective electricity compliances, switch[ing] off unused electric appliances and increas[ing] the temperature of the air-conditioner," he added.

He was answering a question by Padang Besar MP Zahidi Zainul Abidin who asked whether the ministry can give a discount or subsidy to TNB's customers for areas that experience extreme heat for a long time.


Source - The Edge Markets