Malaysia: Electricity price hike due to fuel price increase likely; consumers using 300 kWh/mth or less may be exempt

Malaysian consumers are expected to have a surcharge imposed on their electricity bills next month due to the continuously rising fuel prices as a result of the conflict between Russia and Ukraine that started in February this year, according to a report by The Vibes.

National utilities company Tenaga Nasional Berhad (TNB) is facing difficulty in keeping rates at the current level due to the sharp rise in coal prices, which have increased by four times since the start of the Russia-Ukraine conflict, according to the report; coal is the source for nearly half of Malaysia’s required electricity.

Prices of the benchmark Newcastle coal hit its all-time high of US$440 (RM1,944) per tonne in March, which was up from US$67.50 (RM296.86) previously, and the price increase was driven by fear of a supply shortage as Western countries imposed sanctions on Russia’s financial system and energy products following Russia’s attack on Ukraine.

Putrajaya is understood to be considering the matter on whether it will allow the cost of the increased price of coal to be passed on to consumers, The Vibes wrote, also noting that a cabinet paper on the surcharge issue has been made available at a ministerial meeting yesterday. As of February 2022, the tariff for consumers remained at 39.45 sen per kWh, with a rebate of two sen per kWh without surcharge.

The Imbalance Cost Pass-Through (ICPT) formula is reviewed every six months, and determines if the cost of fuel is translated into the final electricity bill for consumers; the next ICPT review is due next month, The Vibes reported.

In a more recent update, the publication added that around five million households in Malaysia are likely to be spared the expected upcoming surcharge, citing a source that said consumers who are billed less than RM77 per month for electricity, or with a monthly consumption rate of 300 kWh or less may not be subjected to the surcharge.

The consumers who fall under this category of electricity usage is estimated to form around 70% of TNB’s domestic consumer base, and most of these are said to be from the lower-income groups, The Vibes reported. “The hike is expected to be implemented in July and it will affect 30% of household consumers and that is equivalent to 2.37 million consumers,” a source told the news outlet.

In February this year, business groups urged the Malaysian government to intervene and bear the costs of rising fuel prices, following the implementation of the electricity tariff surcharge of 3.7 sen per kWh from February to June for non-domestic (commercial and industrial) users.

A joint statement from 11 business associations and trade groups stated that the recent increase in surcharge would further driver inflation, and lead to the demise of many businesses, many of which would not be able to absorb the increase even if the economy is thriving.

Source: https://paultan.org/2022/06/16/electricity-price-hike-likely-due-to-fuel-price-increase-consumers-using-300-kwh-mth-or-less-may-be-exempt/