KUALA LUMPUR: Tenaga Nasional Bhd (TNB) has announced that the implementation of Imbalance Cost Pass-Through (ICPT) mechanism will be continued for the period of 1 July until 31 December 2019.
The national utility company in an exchange filing today said for the period of 1 January until 30 June 2019, the additional generation cost or imbalance cost is RM1,592 million due to higher fuel and generation cost.
The continuation of the mechanism was approved by the government and via a letter from Suruhanjaya Tenaga (ST) dated 28 June 2019.
The filing noted that the continuation of ICPT was due to increase in average coal price to USD99.235/metric tonne, as compared to the forecasted coal price set in the base tariff for Regulatory Period 2 (RP2) from 2018 to 2020, which is at USD75/metric tonne.
Higher electricity demand has also resulted in the increase in the fuel and generation cost for this period, TNB filing said.
Further, TNB said to cushion the impact of the additional fuel and generation cost of RM1,592 million for this period, the government has approved several measures including the use of Kumpulan Wang Industri Elektrik (KWIE) amounting to RM107 million and revenue adjustment of TNB in accordance with the Incentive Based Regulation mechanism amounting to RM336.7 million, which was agreed during the base tariff determination in RP2 under the Incentive Based Regulation framework.
Therefore, the remaining imbalance cost to be passed-through via the ICPT mechanism is RM1,148 million.
The ICPT implementation for period of 1 July 2019 until 31 December 2019 for full recovery of the remaining imbalance cost of RM1,148 million are via the average base tariff remain unchanged at 39.45 sen/kWh.
TNB also noted that residential customers will not affected by the ICPT surcharge and no ICPT surcharge will be applied to all domestic customers.
Current ICPT surcharge of 2.55 sen/kWh will continue to be maintained for period of 1 July 2019 until 31 December 2019 for all non-domestic customers, it said.
The ICPT mechanism continuation also reflected the cabinet’s decision on 3 May 2017 allowing the adjustment of the regulated piped-gas price for the power sector with an automatic increase of RM1.50/mmbtu every six (6) months until reaching reference market price for a period of three (3) years, starting from 2018 until 2020.
The ICPT is a mechanism approved by the government and implemented by ST since 1 January 2014 as part of a wider regulatory reform called the Incentive Based Regulation.
ICPT mechanism allows TNB to reflect changes in fuel and generation costs in consumer’s electricity tariff every six (6) months.
TNB also said that the impact of ICPT implementation is neutral on TNB and will not have any effect to its business operations and financial position.