ANNOUNCEMENT ON POWER TARIFF REBATES LIKELY TO BE MADE THIS WEEK
Announcement likely to be made by this week
CONSUMERS will most likely know whether they will continue to enjoy electricity rebates or if a surcharge will be imposed instead by this week, industry observers said.
The cost of generating electricity is on the rise, largely driven by four factors, namely oil price fluctuations, use of latest technology such as smart meters, rationalisation of government subsidies and high costs of acquiring renewable energy sources.
The biggest cost is the price of generation fuel, they added. Thus, the rebates enjoyed by consumers now are not permanent.
If surcharges were used to accommodate changes in fuel costs, the rate might also be adjusted in the coming revision, they said.
Although the base rate of power tariff is fixed every three years, the actual rate paid by consumers varies under a mechanism called the Imbalance Cost Pass Through (ICPT).
The next regulatory period is between January 2018 and December 2020. There is also an announcement of the ICPT revision every six months, before the current period ends on Friday.
Power users were still in a sixmonth rebate but there was a possibility that the rebate structure would be replaced by a surcharge system, due to the increase in coal prices and the stronger US dollar against the ringgit, the observers said.
The current tariff of 38.53 sen per kiloWatt hour (kWh) since January 2014 is based on the coal price of US$87.50 (RM376) per tonne, RM41.68/mmBtu for LNG and RM15.20/mmBtu for domestic gas. If the surcharge is imposed, consumers may be paying more for their electricity bills.
Hence, what they could do was to use energy efficiently, the observers advised.
The ICPT mechanism, which is a key feature under the Incentive Based Regulatory (IBR) policy framework, allows adjustments to be made in consumers’ electricity bills every six months.
All users are affected by ICPT except for domestic users using less than 300kWh a month or RM77.
The observers said unlike other commodities, the elasticity of electricity prices is low because the consumption pattern of consumers is less sensitive to changes in electricity prices.
In this regard, efforts to educate consumers to understand the importance of using energy efficiently and their commercial benefits are necessary.