Average Electricity Tariff
NOTES:
- Tariff rate for Lifeline Band Consumers (0-200 kWh, or below RM43.60) has been maintained at 21.8 sen/kWh since 1997
- Tariff rate for 201-300 kWh (RM77.00 and below) band has been maintained at 33.4 sen/kWh since 2009
- Rebate from the government for customers with monthly bill of RM20 or below is effective until December 2018. From 2019, targeted subsidy is implemented whereby RM40 electricity subsidy is given to those registered under the eKasih program.
The electricity tariff covers all costs of bringing electricity to your doorstep.
These include:
Cost to generate, transport and distribute electricity
Fuel cost
Operation and maintenance cost
Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) through Suruhanjaya Tenaga (ST) regulates your electricity tariff under a framework called Incentive Base Regulation (IBR).
This is to ensure that you enjoy reliable and secure supply of electricity at a reasonable price.
Incentive Based Regulation (IBR) will ensure that you are not overpaying for your electricity.
The regulator will constantly monitor costs to ensure only necessary cost is passed through to the customers.
Under the regulator’s watch, the utility provider is also expected to perform efficiently with high quality service so that you’re getting your money’s worth.
Imbalance Cost Pass Through (ICPT) is a mechanism under the Incentive Based Regulation (IBR) framework that allows TNB to reflect changes (either increase or reduce) in fuel and other generation-related costs in the electricity tariff every 6 months.
There are two ICPT key components:
The ICPT is a mechanism approved by the Government and implemented by Suruhanjaya Tenaga (“ST”) since 1 January 2014 as part of a wider regulatory reform called the Incentive Based Regulation (“IBR”). ICPT mechanism allows TNB to reflect changes in fuel and generation costs in consumer’s electricity tariff every six (6) months, subject to Government’s decision and approval.
The implementation of ICPT is neutral to TNB financial.
Since the implementation of IBR and ICPT in 2014, a total rebates and subsidies of RM 6.3 billion has been passed-through to customers.
- For period from 1 March 2015 to 30 June 2015, and from 1 July 2015 to 31 December 2015, a total of RM 1.81 billion is passed-through to the consumers in the form of rebate of 2.25 sen/kWh.
- For period from 1 January 2016 to 30 June 2016, 1 July 2016 to 31 December 2016, 1 January 2017 to 30 June 2017, 1 July 2017 to 31 December 2017, 1 January 2018 to 30 June 2018, a total of RM 4.51 billion is passed-through to the consumers in the form of rebate of 1.52 sen/kWh.
The rebates implemented from March 2015 until June 2018 were made possible largely due to the savings derived from lower actual fuel prices (i.e. coal and LNG) as compared to base fuel prices in the electricity tariff.
The ICPT rebates implementation above affected all customers, except the domestic customers with monthly consumption of below 300kWh.
To cushion the impact of high fuel costs and and to maintain the ICPT surcharge at 1.52 sen/kWh, the Government has subsidized a total amount of RM2.2 billion (RM1.303 billion for July 2017 to December 2017, and RM0.929 billion for January 2018 to June 2018) by utilising the Kumpulan Wang Industri Elektrik “(KWIE”).
For period from 1 July 2018 to 31 December 2018, total imbalance cost passed-through is RM0.69 billion:
- To cushion the ICPT surcharge impact to the customers, the Government has approved mitigation measures amounting to RM 114 million from KWIE to fund the surcharges for the domestic
- This reduces the imbalance costs to be passed-through to RM0.58 billion, which is passed-through to the non-domestic customers via a 1.35 sen/kWh surcharge
For period from 1 January 2019 to 30 June 2019, total imbalance cost passed-through is RM 1.82 billion:
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To cushion the ICPT surcharge impact to the customers, the Government has approved mitigation measures amounting to RM 872 million from the following sources:
- Annual Regulatory Adjustment of RM 564 million; and
- Utilising RM 308 million from KWIE to fund the surcharges for the domestic customers
- This reduces the imbalance costs to be passed-through to RM 0.95 billion, which is passed-through to the non-domestic customers via a 1.35 sen/kWh surcharge (Jan – Feb 2019) and 2.55 sen/kWh (Mar – Jun 2019).
For period 1 January – 30 June 2019 for the ICPT implementation:
- The Government has approved a reduction in ICPT surcharge from the current 2.55 sen/kWh to 2.00 sen/kWh.
- Lower ICPT surcharge is recorded due to minor reduction in actual fuel costs for period July to December 2019, although the actual fuel prices are still above the benchmark fuel prices set in the base tariff for Regulatory Period 2 (“RP2”) from 2018 to 2020.
- In addition, higher electricity demand has also contributed to the increase in fuel and associated generation costs for this period.
- Any future ICPT rebate/surcharge is dependent on the changes in global fuel prices, which will be reviewed every 6 months.
Based on the percentage breakdown of the electricity tariff, it is apparent that the largest component of the system cost in the electricity tariff is represent by the generation costs, which is largely contribute by the fuel costs.
In RP1, generation cost represent the largest shares in the system cost under electricity tariff determination, at 69.5%. The largest component in the generation cost is contributed by fuel, at 60%. Similar trend is observed in RP2 whereby 69% from the total system cost forecasted in the electricity tariff is represent by generation cost, with the largest component in the generation cost is contributed by fuel at 44%.
Higher generation costs beginning the ICPT implementation in Regulatory Period 2 (RP2) were mainly contributed by the following:
- Increasing market coal prices and weakening of Ringgit. The impact of the weakening of Ringgit can be observed from Jan 2017 onwards, which further worsened the price of coal for the power sector.
- In RP2, fuel mix has been shifted from gas to coal, which is subject to market pricing. High price and tight supply of domestic gas has spurred the shift of generation towards coal. Coal make up as the largest mix at about 60% from the total generation mix in RP2.The current market price of coal is already 0.4% higher at USD77.35/MT than RP2 base price at USD75/MT and is expected to further increase in the next quarter.
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Unlike in RP1 where a total of RM 6.3 billion in rebates and subsidies has been approved to be passed through to the customers, surcharges is expected in RP2:
- In RP1, ICPT rebates were made possible largely due to the savings derived from lower actual coal prices and lower coal generation, as compared to base fuel price in the electricity tariff, which was set at USD87.50/MT.
- In RP2, surcharges is expected due to higher actual coal prices and higher coal generation, as compared to base fuel prices in the electricity tariff, which was set at USD75/MT.
- Moving forward, it is also recognize that ICPT in RP2 is a great challenge because of the increasing market fuel price projected for coal.
For this period (January – June 2020) of ICPT implementation, the Government has approved a reduction in ICPT surcharge from the current 2.55 sen/kWh to 2.00 sen/kWh. Lower ICPT surcharge is recorded due to minor reduction in actual fuel costs for period July to December 2019, although the actual fuel prices are still above the benchmark fuel prices set in the base tariff for Regulatory Period 2 (“RP2”) from 2018 to 2020. In addition, higher electricity demand has also contributed to the increase in fuel and associated generation costs for this period.
Details of the actual fuel prices for period July to December 2019 are as follows:
- Increase in the average coal price to USD77.35/metric tonne, as compared to the benchmark coal price set in the base tariff at USD75/metric tonne
- ii. Continuous increase of RM1.50/mmBTU in the regulated piped gas price from RM27.20/mmBTU in the benchmark price set in the base tariff to RM28.70/mmBTU. This is based on Cabinet’s decision on 3rd May 2017, allowing the adjustment of the regulated piped gas price for the power sector with an automatic increase of RM1.50/mmBTU every six (6) months until it reaches Reference Market Price for a period of three (3) years from 2018 until 2020
The above ICPT surcharge will be implemented on the average base tariff of 39.45 sen/kWh as follows:
- Domestic Customers* – not affected by the ICPT surcharge
No surcharge will be applied to domestic customers - Non-Domestic Customers
ICPT surcharge of 2.00 sen/kWh for non-domestic customers
Electricity customers will now have the ability to estimate future ICPT impact on their electricity bill using the ICPT Calculator available at www.myelectrictybill.my.
Please refer to ST’s website (http://www.st.gov.my/) for further details on the ICPT implementation.
The ICPT is a mechanism approved by the Government and implemented by ST since 1 January 2014 as part of a wider regulatory reform called the Incentive Based Regulation (“IBR”). ICPT mechanism allows TNB to reflect changes in fuel and generation costs in consumer’s electricity tariff every six (6) months. This mechanism is implemented according to Section 26 of Electricity Supply (Amendment) Act 2015. TNB also wishes to inform that the impact of ICPT implementation is neutral on TNB and will not have any effect to its business operations and financial position.
* domestic customers refers to residential customers
As of to-date, Government has utilized a total of RM2.6 billion, as a subsidy to cushion the impact of ICPT to consumer’s electricity bill. Details of the utilization are as follows:
- From July 2017 to December 2017 and from January 2018 to June 2018, Government has subsidized a total amount of RM2.2 billion (RM1.303 billion for July 2017 to December 2017, and RM929 million for January 2018 to June 2018) by utilising the Kumpulan Wang Industri Elektrik (“KWIE”).
- From July 2018 to December 2018 and from January 2019 to June 2019 the Government has subsidized a total amount of RM0.4 billion to protect the domestic customers (RM114 million for July 2018 to December 2018, and RM308 million for January 2019 to June 2019) by utilising the Kumpulan Wang Industri Elektrik (“KWIE”).
Suruhanjaya Tenaga as Malaysia's energy regulator determines the calculation and methodology of the ICPT, subject to Government approval on a 6-month basis.
The quantum of the ICPT is calculated by comparing the actual generation costs (including fuel prices) against the reference generation costs (including fuel prices) set in the Base Tariff. The ICPT is only applicable to the energy charge component in the consumer’s bill except Domestic consumers with monthly consumption of 300kWh (RM77.00) & below
Find out how ICPT is being calculated here
Imbalance Cost Pass Through (ICPT) determination is a rigorous review process, which involves series of discussion, review, audit and approval. The process starts with the initiation of discussion and co-ordination with various main input provider from TNB, Single Buyer and Grid System Operator, and ends with submission to Suruhanjaya Tenaga for approval.
Imbalance Cost Pass Through (ICPT) is a charge that is applicable for every kWh of electricity consumed. It is a variable component in the electricity bill and is charged based on your consumption of electricity on a monthly basis.
Its calculation is based on the number of kWh consumed in a month multiplies by the ICPT rate (in sen/kWh). The ICPT charge will then be added to or subtracted from your current bill amount.
All customers are affected by ICPT except for Domestic customers with monthly consumption of RM77.00 (300 kWh) and below.
The ICPT charge on your electricity bill may differ from your neighbour's as the ICPT charge depends on your electrical consumption (kWh) in a month. Therefore, this amount varies from one customer to another, and from month to month, depending on the electrical consumption.
The government will increase household electricity bill subsidy from RM20 and below to RM40 and below, said Finance Minister Lim Guan Eng.
However, he said in line with the government's intention to implement targeted subsidies, the channeling of the subsidy would be dedicated to the poor and hardcore poor registered with the e-Kasih programme.
“It will benefit 185,000 accounts. An allocation of RM80 million is being set aside for this purpose,”
THE BENCHMARK FUEL PRICES IN BASE TARIFF
EFFECTIVE 1st JANUARY 2018
COAL
USD75/MT
RM 14.47/mmBTU @ 4.212/USD
LIQUEFIED NATURAL GAS
RM35/mmBTU
REGULATED GAS
RM27.20/mmBTU
Jan '19 - Dec '20
FOREX
Weakening of RM against US$ will mean that the energy sector has to pay more for the same quantity of fuel that is imported. Imported coal and LNG prices are subjected to the currency exchange rate.
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