TNB: ICPT Adjustment Ensures Fair and Transparent Tariff ICPT Reduction


Tenaga Nasional Berhad (TNB) supports the Government’s decision to adjust the Imbalance Cost Pass-Through (ICPT) mechanism for the period of 1 July until 31 December 2020. This ensures consumers will continue to benefit from a transparent and fair electricity price.

“We are supportive of the decision to continue with the ICPT, which is a mechanism that has served the industry well since 2014, and remains relevant in a volatile fuel-price environment,” said TNB President and Chief Executive Officer, Datuk Seri Amir Hamzah Azizan.

“As the utility company, TNB is governed by the Energy Commission (EC) and operates within a regulated environment, which includes the ICPT mechanism. As guided by the EC’s decisions through the ICPT, TNB will reflect the changes in fuel and other generation-related costs in the electricity tariff every six months,” he added.

The EC today announced the continuation of the ICPT for the next six months ending 31 December 2020 with a reduction in ICPT from the current 2.00 sen/kWh surcharge to 0.00 sen/kWh. As the country’s energy regulator, the EC determines the calculation and methodology of the ICPT, subject to Government approval on a six-monthly basis.

Commenting on the ICPT reduction, Amir said it reflects the actual decline in global fuel prices for the past six months.For the period of January to June 2020, fuel costs fell in tandem with the decline in actual fuel prices below the benchmark fuel prices set in the base tariff for Regulatory Period 2 (RP2) from 2018 to 2020.

The average Applicable Coal Price (ACP) for January to June 2020 stood at USD69.5/MT, as compared to the benchmark coal price set in the base tariff at USD75/MT. Meanwhile gas price1 for the same period is RM26.6/mmBTU which is lower than the benchmark gas price set in the base tariff at RM27.20/mmBTU.

“The changes in fuel prices are not immediately reflected in the tariff to consumers because there is an approximately six to nine-month time lag between the fuel price movement and when those changes actually hit the power sector,” explained Amir.

“This means that when fuel prices are low, consumers may only benefit from the cost past-through by being charged a lower tariff which kicks in about 12 months later. Similarly, when fuel prices are high, it will only be reflected at the consumer’s level much later, giving the system enough time to adjust,” he said.

“Within the regulated framework of the industry, TNB as the main utility company is committed to ensuring our customers receive uninterrupted power supply as well as world-class customer service, and remain steadfast in our purpose to brighten lives,” added Amir.