Tuesday, January 31, 2023

Government is considering to increase the electricity tariff due to steep rise in fuel cost

NewsGovernment is considering to increase the electricity tariff due to steep rise...

Electricity may soon cost more as Tenaga Nasional Bhd (TNB) is expected to impose a surcharge on electricity bills due to the rising fuel prices arising from the Russia-Ukraine conflict that began early this year.

Like most power companies worldwide, TNG is experiencing difficulty in keeping rates at the current level, especially when coal prices are on the rise. Meanwhile, almost half of the nation’s generation needs coal and its prices have gone up fourfold since the war broke out.

According to The Vibes, a source revealed that the government is considering whether it should allow the cost to be passed on to consumers.

Source: Facebook

The government monitors the cost of electricity with the Imbalance Cost Pass-Through (ICPT) formula, which is reviewed every six months. The cost of fuel would be translated into the final consumers’ bills. The next ICPT review is due next month.

Meanwhile, the surcharges have already been applied to commercial users and this is the first time they would be implemented for domestic consumers.

However, the quantum of the surcharge would be decided by the Energy Commission (EC).

In January this year, the government decided that the tariff remains at 39.45 sen per kilowatt-hour (kWh), and domestic consumers would continue to enjoy a rebate of 2 sen/kWh without any surcharge. 

The EC said this move is only made possible as the government had utilised available funds amounting to RM715 million from Kumpulan Wang Industri Elektrik, which is made up of cess-like contributions from power players, to maintain the current rebate for domestic users. 

On TNB’s website, the ICPT mechanism under the Incentive-based Regulation framework allows TNB to reflect changes, either an increase or a reduction, in fuel and other generation-related costs in electricity tariffs every 6 months.

Through the ICPT mechanism, the government stipulates that in the case of a drop in global fuel prices and generation costs, the savings will be returned to the public in the form of an ICPT rebate, and in the event of an increase in fuel and generation costs, the extra costs will be channelled as an ICPT surcharge.

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