TNB: Government yet to decide on proposed 14pct hike in base tariff

KUALA LUMPUR: The government is yet to decide on the proposed 14 per cent hike in base tariff for the three-year regulatory period 2025-2027 (RP4) that is set to commence in January next year, said Tenaga Nasional Bhd.

Its chief financial officer Datuk Nazmi Othman explained that the current tariff schedule which has been in place since 2014 will continue to be in effect with no change in the electricity tariff rate and tariff structure until June 30, 2025.

He said that the government will continue to protect 85 per cent of the 9 million domestic consumers by providing affordable electricity tariff.

"The government will take their time to review the tariff schedule before announcing the revised structure before July next year.

""This will consider fuel and gas price forecasts based on projected market trends over the next six months, which is an ample time," he said at a media briefing to explain further on RP4 here today.

Nazmi added that TNB's announcement to Bursa Malaysia yesterday was a mandatory requirement to comply with current directives following the government's approval to implement RP4 under the Incentive-Based Regulation (IBR) framework for the period from January 2025 to December 2027.

He said the company proposed to raise the base tariff to 45.63 sen to reflect current fuel prices in the market.

Nazmi clarified that the regulatory return rate has been maintained at 7.3 per cent for RP4, similar to the rate set under RP3.

"This will enable TNB to make critical investments in the industry, ensuring a continuous and reliable electricity supply to meet growing customer demand," he said.

Furthermore, generation costs remain the largest component of electricity tariffs, with gas and coal continuing as the primary fuel sources for power generation during this period.

"Any additional generation costs caused by rising fuel prices will be passed through the imbalance cost pass-through (ICPT) mechanism," he said.

ICPT is a mechanism that adjusts electricity tariffs in Malaysia based on actual generation costs, fuel prices, and exchange rates.

The ICPT is implemented every six months and reflects these costs in the form of rebates or surcharges.

The ICPT mechanism is part of the Incentive Based Regulation (IBR) framework, which was approved by the Malaysian government and has been in place since 2014.

Under RP4, the allowable capital expenditure (capex) is RM42.821 billion, consisting of RM26.554 billion in base capex and RM16.267 billion in conditional capex.

With the approved capex under RP4, TNB is expected to deliver significant economic benefits, stimulating the national economy and providing the electrical network needed to facilitate the country's energy transition agenda.

On Dec 20, 2024 the government agreed to maintain the rebate and surcharge rates for electricity tariffs under the ICPT mechanism for all electricity users in Peninsular Malaysia from Jan 1 to June 30, 2025.

Ministry of Energy Transition and Water Transformation (Petra) said the decision to maintain electricity tariff rates for all in the peninsula during this period demonstrates the government's commitment to ensuring the welfare of the people by continuing to protect domestic users through the targeted implementation of electricity subsidies.

"The total electricity subsidy for the period January to June 2025 that will be funded by the government this time is RM2.39 billion.

"Petra believes that the implementation of targeted electricity subsidies is the best approach at this time to reduce the government's subsidy commitment so that the allocation can be channeled in other forms of assistance to the people," it said.

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