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Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com

Tuesday, 09 July 2013 09:17

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KUALA LUMPUR: Malaysians may have to pay more for electricity as Tenaga

Nasional Bhd (TNB) is set to resume the fuel cost pass-through (FCPT)

mechanism next year.

Deputy Energy, Green Technology and Water Minister Datuk Seri Mahdzir

Khalid told Parliament yesterday that TNB will start implementing the

mechanism next year to more efficiently regulate the electricity tariff for users.

The FCPT mechanism allows any changes in fuel cost to be channelled to

users through tariff rates implemented by the government. Any additional fuel

cost incurred due to higher fuel prices will be reflected by a higher electricity

tariff and any reduction or savings will be returned to consumers.

FCPT has been adopted by utilities in many countries such as Singapore,

Thailand, the Philippines, Japan, the US and Europe. It will be assessed every

six months in tandem with the six-monthly natural gas price revision and taking

into account the prevailing market coal and oil prices.

With the implementation of FCPT, users will be given an incentive if power is

used economically and a penalty would incur if power wastage is detected.

This programme will be implemented based on the countrys economic

performance. Users cost of living will also be taken into account, Mahdzir said

in Parliament in reply to a question from Liang Teck Meng (BN-Simpang

Renggam).

Mahdzir said the FCPT mechanism is a component in the incentive base

regulation (IBR) programme. Although the mechanism was first introduced in

mid-2011 and was supposed to be reviewed every six months to reflect

movements in fuel prices, TNB has only revised its power tariff once.

The last adjustment in 2011 reflected the increase in gas price, which jumped

from RM10.70 per million British thermal units (mmBTU) to RM13.70 per

mmBTU, while the coal price is still assumed at US$85 (RM234) per tonne.

The rates were revised to partly cover for the increase in electricity cost of

supply since the last base tariff review in June 2006.

The last round of adjustments saw an average tariff increase of 7.12%

following the 28% upward revision of the natural gas price. There was also an

average 2% increase to partly cover the increase of electricity cost of supply

since June 2006. Industrial and commercial consumers saw an average increase of 8.35%.

Domestic or residential consumers whose monthly consumption falls within the lifeline band of up to 200 kWhsaw no tariff increase as

rates remained unchanged at a highly subsidised rate of 21.8 sen per kWh or approximately RM44 per month. The last tari ff review of the

lifeline band was done in 1997.

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JComments

. .

month will have to pay a rate of at least 40 sen per kWh.

According to TNB, about 75% of the household consumers, or 4.4 million people, use less than 300 kWh so they were not affected by the

tariff increase.

Additionally, Mahdzir said consumers who use below 200kwh a month are subsidised, while payment from those with usage below RM20

is waived.

In April 2011, a 1% charge was imposed as feed-in-tarif f for the renewal energy fund.

TNB is still paying RM13.70 per mmBTU for natural gas, which has been unchanged since June 2011. Gas remains the largest

component of TNBs fuel generation mix followed by coal and oil.

Recently, the power sector was badly hit by a gas shortage. TNB, in particular, saw an additional RM3.07 billion in fuel costs to burn

distillates as an alternative fuel from Jan 1, 2010 to Oct 31, 2011.

This article first appeared in The Edge Financial Daily, on July 9, 2013.

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