No decisions made on electricity tariff in Peninsular Malaysia

27 December 2024

KUALA LUMPUR: No decision has been made regarding electricity tariff hikes in Peninsular Malaysia, Deputy Prime Minister Datuk Seri Fadillah Yusof stated.

Fadillah, who also serves as the Minister of Energy Transition and Water Transformation, emphasized that the Ministry of Energy Transition and Water Transformation (PETRA) has neither been consulted nor informed by Tenaga Nasional Bhd (TNB) about any recent announcements related to tariff increases in the peninsula.

"As stressed by the Prime Minister Datuk Seri Anwar Ibrahim, any increases that could burden the public will not be allowed," he said in a statement today.

Fadillah reiterated that PETRA, in collaboration with the Energy Commission (ST), is still finalising the new electricity tariff schedule, which is expected to take effect in July 2025.

He explained that a review of the base electricity tariff is essential to reassess fuel prices, particularly for coal and gas.

Fadillah assured that the government will ensure that the determination of electricity tariffs in Peninsular Malaysia takes into account all factors, including public welfare and well-being.

"In this matter, any announcement regarding electricity tariffs in the peninsula will be issued by the government," he said.

Fadillah emphasised the government's commitment to protecting domestic users and micro, small, and medium enterprises (MSMEs) by ensuring that electricity tariffs remain competitive and affordable.

He noted that targeted electricity subsidies will continue, ensuring that 85 percent of domestic users—those with monthly consumption of 1,500 kilowatt-hours (kWh) or less—will not be adversely affected.

For commercial and industrial users with high electricity consumption and significant profits, he stated that they would need to pay electricity costs based on actual market rates.

To support these users, Fadillah encouraged the installation of solar panels and energy storage systems at their facilities, as well as the implementation of energy efficiency initiatives. He suggested conducting energy audits in collaboration with Energy Service Companies (ESCOs) and rolling out energy efficiency programs to identify potential electricity savings.

Regarding fuel prices, he explained that during the third regulatory period (RP3) from 2022 to 2024, the projected coal price was set at US$79 (RM353.30) per metric ton, with gas prices determined by a two-tier pricing formula based on the Reference Market Price (RMP).

In the first tier, for gas volumes up to 800 million standard cubic feet per day (mmscfd), the floor price was set at RM24/MMBtu, with a ceiling price of RM30/MMBtu. The average price for gas usage exceeding 800 mmscfd was projected to be RM33/MMBtu.

However, following the COVID-19 pandemic and amidst a global energy crisis, fuel prices have surged. For the fourth regulatory period (RP4) from 2025 to 2027, coal prices are projected to reach US$97 (RM433.80) per metric ton. Additionally, for monthly gas usage up to 800 mmscfd, the floor price is set at RM24/MMBtu, while the ceiling price is at RM35/MMBtu.

"The average price for gas usage exceeding 800 mmscfd is projected at RM46/MMBtu," Fadillah said.

TNB, in its filing with Bursa Malaysia yesterday, had stated that the proposed new tariff schedule with a base tariff of 45.62 sen per kilowatt-hour (kWh) for Peninsular Malaysia under RP4, set to be implemented starting July 1 next year, is still at the proposal stage.