Friday 01 Dec 2023
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PUTRAJAYA (June 23): The government has introduced an electricity tariff surcharge of 10 sen per kilowatt hour (kWh) on domestic users who consume more than 1,500 kWh per month — equivalent to a monthly electricity bill of RM708 — for the second half of 2023.

This means they will no longer enjoy the 2 sen/kWh rebate provided previously, and that their monthly electricity bill will see a minimum increase of RM187 or 25%, said Minister of Natural Resources, Environment and Climate Change Nik Nazmi Nik Ahmad when announcing the electricity tariff adjustment under the imbalance cost pass-through (ICPT) mechanism here on Friday (June 23).

Such high-consumption domestic users involve 83,000 households or 1% of total domestic users, Nik Nazmi said.

To be clear, the adjustment is imposed only when a household's consumption for a particular month surpasses 1,500 kWh. Should a household trigger the surcharge in the first month but use less than 1,500 kWh in the following month, then the higher tariff would only be imposed on the first month, while the 2 sen/kWh rebate will still kick in for the following month.

Households consuming less than 1,500 kWh per month will continue to enjoy the 2 sen/kWh rebate, Nik Nazmi said.

This marks the end of the blanket rebate for domestic users which was introduced in January 2021.

The surcharge for non-domestic consumers in the low voltage category such as SMEs, meanwhile, will remain unchanged at 3.7 sen/kWh. Concurrently, the government has agreed to lower the ICPT surcharge on water and sewerage operators to 3.7 sen/kWh, from 20 sen/kWh in 1H2023.

For the medium- (MV) and high-voltage (HV) power users, the electricity tariff surcharge will be reduced to 17 sen/kWh from 20 sen/kWh for 2H2023, the government said, as fuel costs are normalising from the record highs seen last year.

“This means non-domestic MV and HV users will enjoy a monthly decrease in electricity bills ranging from 28% to 35%,” Nik Nazmi said.

Electricity tariff surcharge or rebate are adjusted every six months under the ICPT mechanism to reflect movements in power generation fuel costs in the preceding six-month period.

Nik Nazmi said the ICPT adjustments follow a slight decrease in average fuel price to US$173.50/MT in 1H2023 from US$224/MT in 2H2022. However, he noted that the average price of coal remains high and exceeds the projected fuel cost of US$79/MT set in Regulatory Period 3 (RP3).

According to data from Tenaga Nasional Bhd (TNB), its average coal price has retreated in 1Q2023 to 27.2 sen/kWh. This compares with base tariff generation costs of around 26 sen/kWh benchmarked in 2021. Newcastle coal price stood at US$140/MT at the time of writing, its lowest since December 2021.

The government subsidised around RM10.76 billion in 1H2023 to keep the tariff surcharge lower than the 27 sen/kWh average in 2H2022. This round, the government may foot another RM5.2 billion, said Nik Nazmi.

Of this, RM58 million will be used to subsidise the 1% of domestic users who consume over 1,500 kWh a month, as the ICPT surcharge has yet to be fully waived, according to Nik Nazmi.

Domestic users have enjoyed the blanket two sen/kWh rebate since January 2021, while non-domestic users have seen various adjustments to the cost of their electricity consumption.

When the two sen/kWh rebate was first introduced for 1H2021, it was implemented for both domestic and non-domestic users.

However, non-domestic users were phased out of the rebate in 1H2022 and imposed a 3.7 sen/kWh surcharge, which was maintained till end-December 2022.

In 1H2023, the government imposed a targeted electricity tariff on non-domestic users, where the 3.7 sen/kWh surcharge was maintained for lower voltage (LV) users, but medium voltage (MV) and high voltage (HV) users saw a surcharge hike to 20 sen/kWh.

In a bourse filing Friday, TNB said the ICPT implementation's impact is neutral on TNB and will not have any effect on its business operations and financial position.

"To date, the government has successfully implemented 18 cycles of ICPT since the introduction of the mechanism in 2015," it added.

Edited ByTan Choe Choe
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