PUTRAJAYA (June 20): Peninsular Malaysia’s electricity tariffs will be adjusted on a monthly basis from July onwards, instead of twice a year.

Tariff revisions due to swings in fuel and generation costs will be done through automatic fuel adjustment system, the Energy Commission (EC) said. The agency also confirmed the base tariff per kilowatt-hour (kWh) will be raised to 45.4 sen under the fourth regulatory period (RP4) from 39.95 sen under RP3.

The new system will take effect from July this year until December 2027.

Under the new system, the tariff will be adjusted up or down, depending on the difference between actual fuel prices and benchmarked fuel prices. However, the automatic increase is capped at three sen per kWh — and anything exceeding this threshold will require Cabinet approval.

“This mechanism allows generation cost adjustment to be implemented automatically based on current market fuel prices and foreign exchange rate,” the EC said. The information will be reported on the commission’s website each month.

The base tariff, an average across all users, is reviewed every regulatory period lasting three years which takes into account potential spending required to expand or maintain the grid.

Under the current imbalance cost pass-through (ICPT) mechanism, the final tariff to be paid by consumers is adjusted every six months in the form of rebates or surcharges on top of the base tariff.

If fuel costs exceed the projection, a surcharge will be levied, resulting in higher tariffs for the consumers, while a rebate will lower the final tariffs if fuel costs drop below forecasts.

The new base tariff of 45.4 sen per kWh comprises 12.98 sen for Tenaga Nasional Bhd’s (KL:TENAGA) capital expenditure and 32.42 sen for generation costs, before any automatic adjustments.

The current base tariff of 39.95 sen per kWh, meanwhile, is based on 13.75 sen for Tenaga’s capital expenditure and 26.20 sen for generation costs. There is a 16 sen ICPT surcharge currently tacked on to the current tariff.

Apart from changes to the tariff’s adjustment mechanism, the commission is also doing away with the tiered tariff system and is now categorising end-users based on consumption. The tariff will also be broken down into charge categories — energy, capacity, network and retail charges.

User categories will comprise low, medium and high voltage — heavier users will face higher energy, capacity, network, and retail charges. Domestic users fall into the low-voltage category.

Further, electricity tariffs under RP4 will be further adjusted for domestic users if their consumption is at least 1,000 kWh and below, and low-voltage non-domestic users who use 200 kWh and below qualify for the Energy Efficiency Incentive (EEI).

There would be specific tariffs for agriculture, water services, sewage and rail operators, and a 10% rebate will be given to registered higher education institutions, schools, welfare homes and houses of worship.

The government will also continue the RM40 electricity bill rebate programme, offering monthly assistance of RM40 to households in the hardcore poor category and registered in the eKasih system.

“Following the implementation of this new tariff schedule, the majority of users are expected not to be affected,” the EC said. “In fact, users who practise efficient energy usage will enjoy higher savings through the EEI.”