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Lower electricity rate for domestic consumers next year as govt maintains tariff rate

ABOUT 7.5 million domestic electric consumers with Tenaga Nasional Bhd (TNB) accounts would see a bill reduction of between 3.6% and 9.2% next year with a two sen per kilowatt-hour (kWh) rebate, as the government maintained the electricity basic tariff rate at 39.45 sen per kWh for 2021.

Energy and Natural Resources Minister Datuk Dr Shamsul Anuar Nasarah said commercial consumers are expected to see their electricity bills reduced by between 4% and 5.2%, while industrial consumers would enjoy between 4.6% and 6.1% reduction with the rebate given.

He said the government agreed to provide the two sen per kWh rebate to all TNB accounts — domestic and non-domestic for six months — from Jan 1, 2021, until June 30, 2021, following the extension of TNB Regulatory Period 2 under the Incentive Based Regulation (IBR) until Dec 31, 2021.

This is in line with the imbalance cost pass-through (ICPT) mechanism under the IBR system that was introduced in January 2014.

“The government hopes that this rebate can help reduce the cost of living of the people and the cost of doing business after being affected by the spread of the Covid-19 pandemic,” Shamsul Anuar said during a press conference in Kuala Lumpur yesterday.

With reduced prices of coal and natural gas in the second half of 2020 (2H20), he said the government agreed to pass the fuel cost savings to all TNB consumers via the rebate. Electricity consumers in the country have been enjoying such rebates since July 2018.

TNB has to contend with fluctuating fuel costs, and the ICPT mechanism takes into account such shifts in prices every half year.

The ICPT is calculated by comparing the actual generation and fuel costs with projections from the previous six months.

The utility firm will transfer the difference in any changes of fuel costs to consumers via a surcharge, if prices go up, or a rebate if they fall.

There are uncontrollable factors by the government and TNB, for instance, given over 50% of electricity generated in Peninsular Malaysia comes from coal-fired power plants, and coal is imported from overseas.

The utility is expected to match any increased tariffs with improved service quality.

Basic components of electricity tariff consist of generation costs, single buyer operations and grid operator operations, transmission and distribution. Fuel makes up more than 40% of the costs.

Another key aspect of the IBR is the implementation of separate account reporting, where each of TNB’s business entity is measured separately for efficiency and cost-effectiveness.

Source: The Malaysian Reserve

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