FAQs on Tariff
When will the revised tariff take effect?
The revised tariff will take effect on 1st January 2014
What is the new average tariff and how much is the tariff increase?
In general, the new tariff will be at an average of 38.53 sen/kWh across all the electricity tariff categories. This corresponds to an increase of 14.89% from the previous tariff of 33.54 sen/kWh
What is the new average tariff of the key customer categories – i.e. Domestic, Commercial and Industrial?
The new average tariff of key customer categories are as follows:
- Domestic: 31.66 sen/kWh (10.6% increase from 28.63 sen/kWh previously)
- Industrial: 36.15 sen/kWh (16.85% increase from 30.94 sen/kWh previously)
- Commercial: 47.92 sen/kWh (16.85% increase 41.01 sen/kWh previously)
What is the impact to the Domestic customers?
• Electricity tariff will increase by an average of 10.60% for Domestic customer category
• However, Domestic customers with a consumption of below 300kWh will not experience any increase and will continue to enjoy the existing rates of:
- 21.80 sen/kWh for monthly consumption of 0 to 200 (Lifeline band) (not changed since 1997)
- 33.4 sen/kWh for monthly consumption of 201 to 300kWh (not changed since 2009)
• There are 3.25 million and 1.31 million customers in the 0 to 200 and 201 to 300 Domestic consumption band (FY2012 figures) respectively . Hence the total number of Domestic customers not affected by the tariff increase is 4.56 million or 70.67% out of 6.45 million total Domestic customers.
• In this regards customers with the monthly bill of RM77.00 and below will not experience any tariff increase.
Will the Government continue to give electricity rebate for Domestic customers utilising less than RM20 (equivalent to 91 kWh) of electricity per month?
• Rebate from the Government for Domestic customers utilising electricity up to RM20 per month is still maintained.
• There are about 1 million of Domestic customers in this category
Are discounts to selected customers such as educational institution, welfare institution and places of worship still maintained?
• Yes the 10% discounts to the following customers are maintained:
- government schools and government institutions of higher learning
- educational institutions partly-funded by the government
- places of worship
- welfare homes registered with the government
• 10% discount is also granted to university teaching hospitals fully funded by government under the ministry of education (USM, UKM and UM)
Who is responsible for tariff calculation methodologies and tariff setting?
• The electricity tariff is determined by the government
What are the cost components of supplying electricity to customers?
• The key cost components of supplying electricity associated with generation, transmission and distribution of electricity through to the end-users are:
- Fuel costs (e.g. coal, gas and other types of fuels utilised by the generators)
- Power purchase costs from Independent Power Producers (IPP) and TNB generators
- Operation and maintenance costs for the electricity supply industry infrastructure
- Procurement of parts and equipment
- Capital expenditures for building and refurbishing infrastructure projects – e.g. transmission and distribution network, sub-stations, control centers and power plants (including finance cost)
What is Incentive Based Regulation (IBR)?
• IBR is a widely adopted mechanism worldwide regardless of market structures and is introduced by the Energy Commission (EC) in 2012 to ensure a sustainable electricity
supply industry sector through transparent and fair returns which promotes maximum efficiency
• IBR implementation ensures that TNB operates efficiently and charges customers competitively priced electricity tariff through linkages between revenues by TNB to the delivery of costs efficiencies over time through an incentive framework based on rewards and penalties.
• Quality of service and performance of TNB are maintained whilst TNB gets the right incentives to improve its performance and increase investments on an on-going basis
• IBR implementation period is for 4 years (year 2014-2017).
What is Imbalance Cost Pass Through (ICPT) ?
• Imbalance Cost Pass Through (ICPT) is a mechanism allowing TNB as the utility to reflect changes (either an increase or reduction) of the uncontrollable fuel costs in the electricity tariff every 6 months.
• The quantum of the ICPT is calculated by comparing the actual generation fuel costs against the forecast of the preceding six months. The ICPT is only applicable to the energy charge component in the consumer’s bill.
• In the event of a reduction in fuel costs, TNB will also pass-through the reduction to customers
What is the impact of the tariff review to the Commercial and Industrial customers?
• Commercial and industrial customers will on average experience an increase of 16.85% in their monthly bill.
• Whilst industrial customers on Special Industrial Tariff (SIT) will experienced an average increase of 18.85% on their monthly electricity bill.
• Details of the impact analyses are captured in Rates (1 January 2014)
The last tariff review as implemented in June 2011, What is the justification for the recent tariff review?
• The current tariff review has been attributed to the rising input costs namely fuel costs:
- Piped gas increase from RM13.70/mmBTU to RM15.20/mmBTU (1000 mmscfd)
- LNG at market price of RM41.68/mmBTU
- Coal at USD87.50/tonne (CIF@CV 5500 kcal/kg)
• To cater for investments in electricity supply infrastructure in order to sustain the system reliability and security .
• To cater for variation of operating costs in the future
TNB has just reported good earnings for the last quarter. Does this recent tariff review (an increase of 4.99 sen/kWh) justified?
• 78.60% of the tariff increase is attributed to the increase in prices of piped gas from RM13.70/mmbtu to RM15.20/mmbtu and LNG at RM41.68/mmbtu. Whilst another 3.4% is for coal priced at USD 87.50/MT .
• Only the remaining 18% (or 0.9 sen/kWh) is to cater for TNB’ s operational costs as well as the required investment in the infrastructure of the electricity supply industry crucial to ensure that the supply reliability and security of the system is maintained and enhanced.
• TNB invests about RM3.5 billion to RM4.0 billion annually for new supply and system improvements on its distribution networks and multi connection channels. In addition TNB
also invest between RM2 billion to RM2.5 billion annually for the transmission network enhancement and development.
Why is there a need to rationalise the gas price subsidies in stages until it reaches the market price?
• The gradual transition of the gas price until it reaches the market price will give maximum value to the economy in providing the basis for the development of a more
sustainable energy sector. Gas pricing based on market principles will ensure effective allocation of energy resources costs, in accordance with the direction of the country into a high income economy by the year 2020.
• In March 2009, the Government has decided that the gas prices will be reviewed every six months. However, gas price review was deferred at that point in time due to the
global financial crisis. The previous gas price revision was in June 2011 from RM10.70/mmBTU to RM13.70/mmBTU
Any changes in the new tariff structure for the Domestic customers?
• The Domestic sector has now been redesigned over 5 bands instead of 9 bands previously . The change is in line with the continuous efforts by TNB to improve the tariff design as well as calls to simplify the tariff structure from the customers.
Is Special Industrial Tariff (SIT) (for eligible customers maintained)?
• Special Industrial Tariff (SIT) is maintained and customers in this category will experience a tariff revision of about 18.85%.This is in line with the Government’s effort to gradually reduce subsidies to the SIT customers
• Even with this revision, SIT customers will still continue to enjoy discounted tariff rates, as compared to the rates for normal Industrial consumers.
• Furthermore the government has also decided to allow for the water and sewerage operator to automatically qualify for the Special Industrial Tariff (SIT)
How will the EE initiatives and development of renewable energy ensure Malaysia’s potential to increase efficient energy consumption is achieved and not through the increase of reserve capacity?
• It should be noted that electricity generation from Renewable Energy (RE) sources is still not fully competetive power generation as compared to conventional sources in particular for large scale electricity generation. Besides, current technologies in RE can only allow for generation in limited capacities and scale.