Power tariff stays until Dec 2015

Electricity tariff in Peninsular Malaysia, Sabah and Labuan stays until the end of this year, despite power generation companies having to pay higher gas prices.

Today, the Energy, Green Technology and Water Ministry said, effective July 2015, the price of piped natural gas in the peninsula go up RM1.50 per million British thermal unit (MMBtu) to RM16.70 per MMBtu from RM15.20 per MMBtu.

The average electricity tariff, however, remains the same at 36.28 sen per kilowatt hour (kWh) for Peninsular Malaysia, Sabah and Labuan until the end of the year.

This is because via the Imbalance Cost Pass-Through (ICPT) mechanism, Tenaga Nasional Bhd (TNB) will absorb the 2.25 sen per kilowatt-hour (kWh) for Peninsular Malaysia and 1.20 sen per kWh average downward revise of tariff for Sabah and Labuan.

“In other words, the increase of fuel price will not impact the electricity tariff and the said rebate will be able to continue, thanks to the RM1.08 billion cost saving from ICPT for January to June 2015 period,” the ministry said.

“This sum of amount also includes the RM300 million cost saving from the renegotiation of power purchase agreement with first generation independent power producers,” it added.

ICPT is a mechanism implemented since January 2014, which allows the government to pass excessive fuel costs to consumer, which in this case, the previous tariff hike was more than Tenaga Nasional Bhd needed due to falling coal prices and an improved generation mix.

The ministry said the cost saving in the peninsula also resulted from the higher usage of coal-fired power, where prices are relatively lower compared with fuel such as piped natural gas and liquefied natural gas.

Since ICPT is not implemented in Sabah and Labuan, the federal government will continue subsidising the fuel cost and electricity tariff that are estimated to amount to RM685 million this year for these two areas.

“The government will continue to monitor the cost of fuel and other power generation cost until January 2016, when a new review will be conducted,” the ministry said.

According to the Electricity Supply Act 1990, Sarawak's power supply and tariff are not under the ministry’s purview.