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Tariff & ICPT

Key Highlights

1. How much is the ICPT amount to be passed through to customers for the period of 1 January 2019 to 30 June 2019?

Imbalance Cost Pass-Through (ICPT) implementation for the period of 1 January – 30 June 2019 are as follows:

a) The average Base Tariff remain unchanged at 39.45 sen/kWh.

b) Higher fuel and generation costs for the period of 1 July – 31 December 2018 has resulted to additional generation cost of RM1,820 million.

c) Surcharge for domestic customers, amounting to RM 308 million will be funded by Kumpulan Wang Industri Elektrik (KWIE).

d) Part of the surcharge for non-domestic customers, amounting to RM 564 million will be funded from cost and revenue adjustment of Tenaga Nasional Berhad for year 2018, which was agreed during the base tariff determination in RP2 under the Incentive Based Regulation (“IBR”) framework.

Table of the latest ICPT Rate:

Domestic Customers Non-domestic Customers

The ICPT rate for domestic customers are as follows:

a. Domestic customers with monthly consumption up to 300kWh is not subjected by ICPT implementation.

b. For domestic customers with monthly consumption above 300kWh, the ICPT surcharge will be funded by Kumpulan Wang Industri Elektrik (“KWIE”). Hence the ICPT rate is set at 0 sen/kWh.

The ICPT surcharge for Non-domestic customers is implemented by phase:

a. Maintain the current ICPT surcharge of 1.35 sen/kWh for period 1 Jan 2019 until 28 Feb 2019.

b. Beginning 1 March 2019 until 30 June 2019, the applicable ICPT surcharge is 2.55 sen/kWh

* Domestic customers refer to Residential customers
*Non-domestic customers refer to commercial, industrial customers and others

2. Who will be affected by this ICPT surcharge?

This ICPT surcharge will be applicable to all non-domestic customers.

No surcharge will be applicable to domestic customers, as the ICPT surcharge will be funded by Kumpulan Wang Industri Elektrik (KWIE) and hence the ICPT rate is set at 0 sen/kWh. Domestic customers with monthly consumption of 300kWh (RM77.00) and below is not subjected to ICPT mechanism.

3.Why Domestic customers with monthly consumption of 300 kWh and below are not affected by this ICPT implementation?

Domestic customers with monthly consumption of 300kWh (RM 77.00) and below were not affected in the previous tariff reviews i.e:

i. Tariff rate for Lifeline Band consumers (0-200 kWh) has been maintained at 21.8 sen/kWh since 1997; and

ii. Tariff rate for 201-300 kWh band has been maintained at 33.4 sen/kWh since 2009.

In addition, the government allocates RM 40.00 electricity subsidies of RM 40.00 specifically to poor hardcore domestic customers who are registered with the e-kasih program. The customers under this group will not be affected by ICPT implementation.

Why does the new ICPT surcharge for Non-Domestic Customers is implemented in staggered?

The effective date for the new ICPT period starts from 1 January 2019- 30 June 2019. However, for this period, the ICPT implementation will be applicable in stages. From 1 Jan 2019 until 28 Feb 2019, the current ICPT surcharge will be maintained at 1.35 sen/kWh, and the new ICPT surcharge of 2.55 sen/kWh will be implemented starting from 1 March 2019 to 30 June 2019.

The staggered implementation of ICPT surcharge is a once-off, which aims to allow ample notice and provide adequate transition period to the non-domestic customers.

What is Imbalance Cost Pass-Through (ICPT)?

ICPT is a mechanism under the Incentive Based Regulation (IBR) framework which allows TNB as the utility to reflect changes (either increase or reduction) in fuel and other generation-related costs in the electricity tariff every six (6) months in the form of rebate or surcharge.

What are the major factors contributing to the increased in ICPT cost?

The major factor contributing to the increase in ICPT cost for this period is the increase in the average coal price to USD97.835 / metric tonne, as compared to the forecasted price set in the base tariffs for the second regulatory period of the IBR (Regulatory Period 2 - RP2: 2018-2020) of USD75 / metric tonne. The increase in coal prices are beyond Government control as it was based on global market price.

Who is responsible for ICPT calculation methodology?

Suruhanjaya Tenaga as Malaysia’s energy regulator determines the calculation and methodology of the ICPT, subject to Government approval on a 6-monthly basis.

What is Kumpulan Wang Industri Elektrik (KWIE)?

Kumpulan Wang Industri Elektrik (KWIE) is a fund that is controlled by Suruhanjaya Tenaga (ST). The objective of setting up KWIE is to manage or control the impact of electricity tariffs on consumers.

What are the components of Imbalance Cost Pass-Through (ICPT)?

There are two ICPT key components:

  • FCPT: Fuel Cost Pass-Through component captures any variation in fuel cost (specific to piped gas, liquefied natural gas (LNG) and coal) as a result of changes in the fuel price, fuel quantity, generation mix, exchange rate and etc.

  • GSCPT: Generation Specific Cost Pass-Through component captures any variation in other generation specific costs as a result of changes in other costs associated with the Power Purchase Agreements (PPAs) & Service Level Agreements (SLAs) and fuel procurement contracts i.e. Coal Supply Agreement (CSA), Coal Supply and Transportation Agreement (CSTA), Gas Supply Agreement (GSA) / Gas Framework Agreement (GFA) and etc.

How is the ICPT amount for pass through to customer is calculated?

The ICPT is calculated based on an estimated actual fuel cost and generation specific costs for a particular six (6) months period against the corresponding baseline costs in the Base Tariff.

Since its implementation in 2014 until June 2018, a total of RM6.3 billion of ICPT rebate and subsidy has been passed through to electricity customers in Peninsular Malaysia. Due to the increase in market coal price which has resulted to higher fuel and generation cost from July 2018 to June 2019, a total of RM2.5 billion of ICPT surcharge has been passed through to non-domestic electricity customers in Peninsular Malaysia.

How will the ICPT impact my electricity bill?

  • It is a charge that is applicable for every kWh of electricity consumed. ICPT is a variable component in the electricity bill where the ICPT is charged based on your consumption of electricity on a monthly basis.
  • The ICPT is straight “pass-through” charge and its calculation is the number of kWh consumed in a month multiplies by the ICPT rate (in sen/kWh).  The ICPT charge will then be added to or subtracted from your current bill amount

Do all customers pay the same amount of ICPT charges?

The ICPT charge on your electricity bill may differ from your neighbour's as the ICPT charge depends on your energy consumption (kWh) in a month. Therefore, this amount varies from one customer to another and from month to month, depending on the energy consumption.

To reduce the ICPT impact, the consumers are advised to implement the electricity saving measures as recommended by the Suruhanjaya Tenaga.

What is the initiative from Government for customers to anticipate the next ICPT rate?

The government has provided a user-friendly ICPT Calculation platform through the portal on the Suruhanjaya Tenaga official website. The ICPT calculator will help customers to estimate ICPT rate on their monthly electricity bills beginning January 2019.

The purpose of this ICPT Calculator is to educate customers to be more sensitive and alert to the changes in fuel prices and foreign exchange rates in the market. Customers can key in the coal and gas price forecasts as well as the fuel price & forex forecast to estimate the cost of ICPT at the next tariff adjustment.