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.

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