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Tariff & ICPT

Key Highlights

1. How much is the ICPT amount to be passed through to customers?

The ICPT quantum for the period 1st July 2017 to 31st December 2017 is – 1.52 sen/kWh, i.e. a rebate of 1.52 sen/kWh. For ICPT period July to December 2017, the Government will bear a total cost of RM 1.303 billion comprises of:

  • The actual Imbalance Cost for period January to June 2017 of RM 523.23 million, resulting a surcharge of 1.02 sen/kWh. This additional cost was mainly due to (i) rising coal prices in the global market and due to the impact of foreign exchange rates on ringgit, (ii) additional gas cost of RM 280 million following the Government’s subsidy rationalisation plan and Government’s decision to further increase the piped gas price by RM1.50/mmBTU to the power sector from the current RM21.20/mmBTU to RM22.70/mmBTU.

            The new gas price of RM22.70/mmBTU will be effective from 1 July 2017.

  • The cost to continue the current ICPT rebate of 1.52 sen/kWh, which amounts to RM 780

The Government will fund the above amount of RM 1.303 billion by utilising the PPA Saving Fund, which is a fund set-up by the Government to accumulate savings from the Renegotiation of Power Purchase Agreements with the First Generation Independent Power Producers. The objective of this PPA Saving Fund is to cushion the impact on tariff to the customers due to the fluctuation of fuel prices.

2.    Who will be affected by this tariff rebate?

This tariff rebate will be applicable to all customers except Domestic customers with monthly consumption of 300 kWh (RM 77.00) and below.

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

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

  • Tariff rate for Lifeline Band consumers (0-200 kWh) has been maintained at 21.8 sen/kWh since 1997; and
  • Tariff rate for 201-300 kWh band has been maintained at 33.4 sen/kWh since 2009.

Furthermore, the Government will continue to subsidise around 1 million Domestic customers under the Lifeline Band with monthly bill of RM 20.00 and below. Therefore, these customers will not be affected by this ICPT tariff rebate.

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.

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 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 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.

What is the ICPT quantum for the current period of 1st July 2017 to 31st December 2017?

The ICPT quantum for the period 1st July 2017 to 31st December 2017 is – 1.52 sen/kWh, i.e. a rebate of 1.52 sen/kWh.

What is the rationale behind the current ICPT rebate?

For ICPT period July to December 2017, the Government will bear a total cost of RM 1.303 billion comprises of:

  • The actual Imbalance Cost for period January to June 2017 of RM 523.23 million, resulting a surcharge of 1.02 sen/kWh. This additional cost was mainly due to (i) rising coal prices in the global market and due to the impact of foreign exchange rates on ringgit, (ii) additional gas cost of RM 280 million following the Government’s subsidy rationalisation plan and Government’s decision to further increase the piped gas price by RM1.50/mmBTU to the power sector from the current RM21.20/mmBTU to RM22.70/mmBTU.

            The new gas price of RM22.70/mmBTU will be effective from 1 July 2017.

  • The cost to continue the current ICPT rebate of 1.52 sen/kWh, which amounts to RM 780 million.

The Government will fund the above amount of RM 1.303 billion by utilising the PPA Saving Fund, which is a fund set-up by the Government to accumulate savings from the Renegotiation of Power Purchase Agreements with the First Generation Independent Power Producers. The objective of this PPA Saving Fund is to cushion the impact on tariff to the customers due to the fluctuation of fuel prices.

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.

Are all customers affected by ICPT?

  • Yes, all customers are affected by ICPT except for Domestic customers with monthly consumption of 300 kWh (RM 77.00) and below.
  • In this regard, Domestic customers with monthly consumption of 300 kWh (RM 77.00) and below will not experience any bill increase or bill reduction resulting from ICPT.

Why are Domestic customers with monthly consumption of 300 kWh (RM 77.00) and below not affected by this ICPT tariff rebate?

Domestic customers with monthly consumption of 300kWh (RM77.00) and below were not affected in the previous tariff reviews i.e.:

  • Tariff rate for Lifeline Band consumers (0-200 kWh) has been maintained at 21.8 sen/kWh since 1997; and
  • Tariff rate for 201-300 kWh band has been maintained at 33.4 sen/kWh since 2009.

Furthermore, the Government will continue to subsidise around 1 million Domestic customers under the Lifeline Band with monthly bill of RM 20.00 and below. Therefore, these customers will not be affected by this ICPT tariff rebate.

Do all customers pay the same amount of ICPT charges?

The ICPT rate is fixed for all customers except for Domestic customers with monthly consumption of 300 kWh (RM 77.00) and below.  However, 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.