Malaysia’s electricity tariffs for the consumer, residential, industrial and commercial segments are among the lowest compared to other countries in the Asean region.
Energy Commission (EC) acting CEO and senior director Azhar Omar said the residential segment enjoyed the lowest tariff as it received a cross-subsidy from the industrial and commercial sectors.
However, in developed countries, the tariff for the industrial sector was low, and that for domestic consumers was high.
“This is because unlike other countries which are more nuanced towards commercial use, our tariff structure is designed to not burden, but help the people,” he told Bernama Radio in an interview recently.
The interview, which focused on fixed electricity tariff, was broadcast at 6.15pm on July 11, over the FM radio at 93.9MHz and via Facebook Live social media platform.
Azhar is responsible for electricity industry development and market regulation at EC, Malaysia’s regulatory body for the electricity supply industry.
Since 2008, consumers who use less than RM20 in their monthly electricity bills have been receiving a rebate. In other words, the government absorbs the charges for consumers whose monthly utility bill is less than RM20.
To date, the government has spent RM1.05 billion in giving out rebates, Azhar said.
“To help the lower-income group, the government has also subsidised consumers in various ways, other than through rebates.
“These costs will keep increasing. Currently, the fund comes from renegotiations with the first-generation independent power producers (IPPs) who had signed power purchase agreements (PPAs) with the EC,” he added.
He said of the RM1.8 billion in savings from the renegotiations, the EC had already used up RM1.3 billion.
“There is not much left. So, in future, we may impose a surcharge (if fuel prices continue rising or in situations of an unfavourable exchange rate) instead of giving a rebate,” said Azhar.
He said the EC’s function is to regulate the country’s electricity supply industry with a focus on three areas, namely reliable electricity supply, reasonable costs and safety.
In an earlier report, Azhar told Bernama that the government is concerned about tariff increases and that consumers need to be mindful that electricity rebates will not continue forever and they must brace for possible imposition of a surcharge.
He said the helping hand will not last long and Malaysians need to be prepared for the inevitable and use electricity prudently.
“We should be imposing surcharges, but out of concern for the wellbeing of the people, the government is still using reserves to absorb the increase in costs because funds available may not be able to cater to future needs. People need to be prepared,” he said.
Azhar said it is not because the government cannot absorb the cost increase, but it prefers to use the funds for the country’s economic development, adding that the country needs a lot of financial resources to build hospitals, roads and others.
“The role of the commission is to ensure reliable electricity supply at reasonable prices by factoring in the costs of providing electricity and reasonable returns to the utility company, fuel supply costs and others,” he said. — Bernama