No Electricity Tariff Surcharge for Domestic Consumers from Jan-Jun 2020

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The electricity tariff in Peninsular Malaysia for domestic consumers will be maintained while the surcharge for commercial and industrial users will be reduced effective Jan 1 until June 30, next year.

Minister of Energy, Science, Technology, Environment and Climate Change, Yeo Bee Yin said the Cabinet had agreed to set the rates based on the ‘Incentive Based Regulations’ (IBR) mechanism.

“A total of RM62.95 million from the Electricity Industry Fund (EIF) will be used to cover the imbalance cost pass through (ICPT) surcharge so that it will not be imposed on domestic consumers.

“In this regard, the effective electricity tariff rate will be maintained at 39.45 sen per kWh; this is a continuous 18 months with no increase through surcharge for domestic consumers,” she said.

Yeo said this in response to Khoo Poay Tiong (PH-Kota Melaka) during the Minister’s Question Time at Dewan Rakyat today.

Khoo had asked about the status of the IBR mechanism to determine the electricity tariff for the peninsular every six months and whether there would be an increase in January 2020.

According to the minister, 7.4 million domestic consumers would be exempted from paying surcharge while non-domestic consumers would enjoy a surcharge reduction of 0.55 sen per kWh from RM2.55 per kWh.

She said the surcharge on commercial and industrial users was reduced in light of lower fuel costs over the last 6 months.

IBR, a mechanism for electricity tariff setting with incentives to improve efficiency, was implemented in 2015 and reviewed every three years, where the first regulatory period (RP1) was from 2015 to 2017, and the second regulatory period (RP2), from 2018 to 2020.

“Through this mechanism, base tariffs are determined by the average price of coal and gas fuels during the regulatory period.

“Any difference in actual cost with the price assumption in the base tariff will be adjusted every six months under the ICPT mechanism either in the form of surcharge or rebate, depending on fuel costs and other costs generated during the period,” said Yeo.

The ICPT surcharge or rebate for January to June 2020 is determined by fuel prices between July and December 2019.