THE government, via a letter from Energy Commission Malaysia (EC) has given its approval for Tenaga Nasional Bhd (TNB) to continue implementing the Imbalance Cost Pass-Through (ICPT) mechanism for the period of Jan 1 to June 30, 2023.

In a statement today, the EC said the additional cost or imbalance cost was RM10.6 billion, mainly due to the increase in average coal price which resulted in the increase in the cost of electricity generation by 74%.

The EC said all users of the domestic tariff category will not experience the electricity tariff increase due to the rebate of two sen/kWh is maintained as from the previous ICPT, while all users of the low voltage tariff category consisting of micro, small and medium businesses (MSMEs) will not experience any increase in electricity tariffs, as the 3.7 sen/kWh surcharge is maintained.

It also said all low and medium-voltage specific agriculture tariff category users will not experience any increase in electricity tariffs because the surcharge of 3.7 sen/kWh is maintained.

However, all other users that include the low voltage tariff category, medium voltage and high voltage consisting of Commercial Tariffs and Industrial will be subject to an ICPT surcharge at a rate of 20 sen/kWh.

The following is from the EC statement:

“For the ICPT review period from July 1 to Dec 31, 2022, there was a higher increase in fuel costs and other generation costs by RM16.2 billion or equivalent to the ICPT surcharge at a rate of 27 sen/kWh.

The cost increase is a result of the increase in the cost of fuel in the world market as a result of the global crisis and the world’s coal supply constraints.

Currently, more than 90% of the electricity generated in the Peninsula uses coal and gas fuel. Because the cost of fuel has gone up significantly, it caused the cost of electricity generation to increase by 74%.

The increase in the price of coal fuel is beyond the Government’s control as it is based on global market prices. 

Taking into account the number of users who will not experience a tariff increase which is more than nine million electricity users (90% of all users in Peninsular Malaysia), the government will allocate as much as RM8.82 billion in subsidies to all categories of users involved.

While for all categories of commercial and industrial users, the government is still subsidising as much as RM1.93 billion so that the increase in the surcharge rate is not fully released dramatically.

This means, the amount of subsidy allocated by the government to accommodate all users for the ICPT implementation period this time is as much as RM10.76 billion.” — TMR/pic by TMR