Kota Marudu Member of Parliament

Reduced electricity tariff rebate expected

KUALA LUMPUR: The reduced tariff rebate for electricity usage at 1.52 sen per kWh for Peninsular Malaysia from January to June 2016 is expected, given the higher gas and liquefied natural gas consumption in the second half of 2015 on the outages of coal-fired plants coupled with recovery of coal prices.

Kenanga Research said the 1.52 sen per kWh tariff rebate is based on fuel cost savings of RM762.9mil from July to December 2015 under the Imbalance Cost Pass-Through (ICPT) mechanism.

“This latest tariff review is earnings neutral to Tenaga Nasional Bhd (TNB) given the fuel cost risk is now being transferred to the end-users,” it said in a research note.

In addition, it said the price for subsidised piped gas would be raised by RM1.50/MMBtu to RM18.20/MMBtu for January-July 2016 (July-December 2015 at RM16.70/MMBtu), while the base tariff of 38.53 sen per kWh remains unchanged.


“This is in line with the mechanism, whereby, the subsidised piped gas price will increase RM1.50/MMBtu every six months, while the 38.53 sen per kWh base tariff is maintained until end-2017,” it added.

Kenanga said it was maintaining an outperform rating for the national utility company.

On outlook, Kenanga remained positive on the ICPT mechanism, which ensured earnings certainty, as the fuel cost risk is fully-passed through on a six month laggard basis.

Thus, future earnings would depend mainly on its operational efficiency.

On Tuesday, Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the rebates and tariff reduction, would be passed on to all categories of consumers of TNB in Peninsular Malaysia and Sabah Electricity Sdn Bhd in Sabah and Labuan, except for domestic consumers with a consumption of 300 kWh of electricity or less per month.

Ongkili said the power tariff rate was decided by the Cabinet.


Source - The Star