Increase in Electricity Tariff
Date: 30/05/2011
Announcement on the Increase in Electricity Tariff in Peninsular Malaysia Due to the Revision of Natural Gas Price, Revision of Base Tariff & Implementation of Feed-In-Tariff (FiT) for Renewable Energy (RE)
Tenaga Nasional Berhad (TNB) wishes to inform that the Government today has announced that the natural gas price to the power sector will be increased from RM10.70/mmBTU to RM13.70/mmBTU effective from 1st June 2011. As a result of the gas price increase, TNB's gas bill will increase by about RM1.5 billion per year. Due to the gas price increase, TNB will have to increase the electricity tariff to cover for the additional cost. The increase in natural gas price is based on the Government natural gas pricing mechanism in which the price is reviewed every six (6) months in tandem with the market price trend.
The Government has also agreed to TNB's request to increase its base tariff by 2%. This base tariff increase is to cater for the increase in the cost of electricity supply since the last base tariff review in 2006, due to the following:
Consumer Price Index (CPI) increase of 14% from the period 2006 to 2011;
Increase in capital expenditure;
Increase in maintenance cost (O&M) of about 19% in the same period; and
Increase in cost of raw materials for electrical supply equipment.
In line with the Renewable Energy (RE) Act which was passed in April 2011, the Government will impose 1% as Feed-in-Tariff (FiT) for RE Fund, effective 1st September 2011. The fund will be utilised for promotion and development of RE projects and initiatives and will be managed by Sustainable Energy Development Authority (SEDA) under the Ministry of Energy, Green Technology and Water.
In summary, the major features of the new electricity tariff rates are as follows:-
Average tariff will be increased by 7.12%. The increase is contributed by:
Average 5.12% increase due to the 28% upward revision of natural gas price to the power sector from RM10.70/mmBTU to RM13.70/mmBTU; and
Average 2.0% increase to partly recover for the increase of electricity cost of supply since June 2006
Industrial consumers will experience an average increase of 8.35% (ranging from 6.2% to about 10%)
Commercial consumers will experience an average increase of 8.35% (ranging from 6.2% to about 8.35%)
Domestic consumers - The rate for Lifeline Band (i.e. monthly consumption of up to 200kWh) is maintained at a subsidised rate of 21.8 sen/kWh (i.e. no tariff increase). This rate has never been reviewed during several tariff reviews since 1997;
Consumers using 300kWh per month and below will not experience tariff increase;
Hence, no tariff increase to 75% of the household consumers (4.4 million consumers);
No tariff increase for Lifeline Band (3.3 million consumers)
No tariff increase for 201-300 kWh band (1.1 million consumers)
Special Industrial Tariff (SIT) consumers will experience an increase of about 10%. This is in line with the Government's effort to gradually reduce subsidies to industries. Even with this increase, SIT consumers will continue to enjoy discounted tariff rates as compared to the rates for normal Industrial consumers;
The 10% discount on electricity bills currently enjoyed by Government schools, Government institutions of higher learning, places of worship and welfare homes registered with the Government is maintained. The 10% discount will also be extended to educational institutions partly-funded by the Government;
Thermal Energy Storage (TES) consumers will enjoy higher discount for off-peak electricity consumption. In addition, 'Standby' charge for Co-generators will be reduced to encourage Green Technology, Energy Efficiency and Demand Side Management (DSM) initiatives;
Water treatment, water distribution and sewerage companies to be categorised under Industrial Tariff; and
The electricity rebate by the Government for Domestic consumers with monthly bill of not more than RM20 will be maintained until December 2011.
Fuel Cost Pass-Through (FCPT) Mechanism
The Government will also introduce a Fuel Cost Pass-Through (FCPT) mechanism for the power sector. Under the FCPT, the fuel cost will be reviewed every six (6) months and any changes (upward or downward) in the fuel cost due to the fluctuation in the fuel prices (namely gas, coal and oil) will be passed through in the end-user tariff.
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