TNB gets government approval to continue ICPT mechanism

KUALA LUMPUR: The government has, via a letter from the Energy Commission, given its approval for Tenaga Nasional Bhd (TNB) to continue implementing the imbalance cost pass-through (ICPT) mechanism in the first half of next year.

However, the average base tariff would remain unchanged for the period from Jan 1 to June 30, despite the higher fuel and generation cost incurred for the period of July 1 until Dec 31, 2018, the utility firm said in a filing with Bursa Malaysia yesterday.

TNB said the additional generation cost or imbalance cost was RM1.82bil mainly due to the increase in average coal price to US$97.835 per tonne, compared with the forecast coal price of US$75 per tonne set in the base tariff for Regulatory Period two (RP2) from 2018 to 2020.

It said the government had approved two mitigation measures to cushion the impact of high fuel and generation cost of RM1.82bil to be passed through to customers via the ICPT mechanism. One measure is using the electricity industry fund to fund the surcharge for domestic customers amounting to RM308mil.

Meanwhile, part of the surcharge for non-domestic customers amounting to RM564mil would be funded from cost and revenue adjustment of TNB for 2018, as agreed during the base tariff determination in RP2 under the Incentive Based Regulation (IBR) framework, it added.

Therefore, TNB said, the remaining imbalance cost to be passed- through via the ICPT mechanism was RM948 mil.

No surcharge will be applied to the domestic customers, but the imbalance cost of RM948mil will be passed through to non-domestic customers via staggered ICPT surcharge implementation.

The ICPT surcharge for the non-domestic customers will be maintained at 1.35 sen per kilowatt hour (kWh) for January and February 2019, after which the applicable surcharge will rise to 2.55 sen per kWh. — Bernama