Non-households ICPT surcharge to be reduced

TNB says this is for the July to December period

“Given the drop in global fuel prices, the industry had expected to see a dip in overall electricity tariffs which would have been most welcomed and provide a reprieve to manufacturers during the current challenging period.” Federation of Malaysian Manufacturers

PETALING JAYA: Tenaga Nasional Bhd (TNB) is reducing the imbalance cost passthrough (ICPT) surcharge for non-households for the July to December period.

In a statementy, the utility giant said the Energy Commission (EC) had announced the continuation of the ICPT for the next six months ending Dec 31, 2020, with a reduction in ICPT from the current 2.00 sen/kwh surcharge to 0.00 sen/kwh.

“We are supportive of the decision to continue with the ICPT, which is a mechanism that has served the industry well since 2014 and remains relevant in a volatile fuel-price environment,” said TNB president and chief executive officer Datuk Seri Amir Hamzah Azizan in the statement.

Amir said the ICPT reduction reflected the actual decline in global fuel prices for the past six months.

“For the period of January to June 2020, fuel costs fell in tandem with the decline in actual fuel prices below the benchmark fuel prices set in the base tariff for Regulatory Period 2 (RP2) from 2018 to 2020.”

As the utility company, TNB is governed by the EC and operates within a regulated environment, which includes the ICPT mechanism.

As guided by the EC’S decisions through the ICPT, TNB will reflect the changes in fuel and other generation-related costs in the electricity tariff every six months.”

TNB said the ICPT would ensure consumers will continue to benefit from a transparent and fair electricity price.

For the period of January to June 2020, fuel costs fell in tandem with the decline in actual fuel prices below the benchmark fuel prices set in the base tariff for Regulatory Period 2 (RP2) from 2018 to 2020.

The average applicable coal price for January to June 2020 stood at US$69.5 (RM298) per tonne, as compared to the benchmark coal price set in the base tariff at US$75 (RM321) per tonne.

Meanwhile gas price1 for the same period is RM26.60 per million metric British thermal units (mmbtu), which is lower than the benchmark gas price set in the base tariff at Rm27.20/mmbtu.

Amir said the changes in fuel prices are not immediately reflected in the tariff to consumers because there is a six to nine-month time lag between the fuel price movement and when those changes actually hit the power sector.

“This means that when fuel prices are low, consumers may only benefit from the cost past-through by being charged a lower tariff which kicks in about 12 months later.

Similarly, when fuel prices are high, it will only be reflected at the consumer’s level much later, giving the system enough time to adjust.”

Commenting on TNB’S move to cut the non-domestic ICPT surcharge, the Federation of Malaysian Manufacturers (FMM) said it is looking forward to more relief from energy providers, in particular for the more severely affected manufacturing sub-subsectors, including those heavily linked to the construction and hospitality sectors.

“Given the drop in global fuel prices, the industry had expected to see a dip in overall electricity tariffs which would have been most welcomed and provide a reprieve to manufacturers during the current challenging period, as there has been very little assistance for manufacturers in relation to mitigating energy cost impact caused by the Covid-19 pandemic and movement control order,” it said in a statement yesterday.