Tariff will be regulated through mechanism

crom mage BN “Inflation will rise whenever there is an increase in prices of goods,” Datuk Seri Abdul Wahid Omar, head of Malaysia’s Economic Planning Unit, told reporters yesterday in Putrajaya, outside of Kuala Lumpur, before the announcement.

“If there is an increase in electricity tariffs, the inflation rate will be below the three per cent benchmark, just like how it was after we reduced fuel subsidies.”

TNB, based in Kuala Lumpur, last raised tariffs in June 2011 by an average of 7.1 per cent. Its shares were halted yesterday for the announcement.

Meanwhile, TNB in a filing with Bursa Malaysia yesterday said the government announced that effective January 1, 2014, the average electricity tariff in Peninsular Malaysia will be increased by 4.99 sen/ kWh or 14.89 per cent from the current average of 33.54 sen/ kWh to 38.53 sen/kWh based on the four components.

It said the four components are the adjustment of domestic gas price from RM13.70 per one million British thermal unit (MMBtu) to RM15.20 per MMBtu which will affect the electricity tariff by 1.52 per cent or 0.51 sen/ kWh.

Besides that, TNB said the price of imported Liquefied Natural Gas ( LNG) fixed at RM41.68 per MMBtu will have an impact on the electricity tariff by 10.17 per cent or 3.41 sen per kWh.

Furthermore, it noted that the adjustment of base price for coal from US$ 85 per metric tonne to US$ 87.5/metric tonne will also have an impact on the electricity tariff by 0.51per cent or 0.17 sen/ kWh.

In addition, it said the review of TNB’s base tariff which is being raised by 2.69 per cent or 0.90 sen/kWh from the current average tariff.

The power utility company noted that the base tariff will be regulated through a mechanism called the Incentive Based Regulation ( IBR) to be administered by the Energy Commission.

Apart from that, TNB said to enhance the promotion of Renewable Energy ( RE) in the country, the government has also decided to revise the collection from consumers for the RE fund from one to 1.6 per cent effective January 1, 2014.

It added that the 1.6 per cent collection will be payable by all electricity consumers, except for domestic consumers who use less than 300kWh per month.

Hence, it highlighted that no tariff increase to 70.7 per cent of the household consumers who made up of 4.6 million consumers. TNB also revealed that there is no tariff increase for lifeline band which would affect 3.25 million consumers.

The power utility company said the domestic tariff band is reduced from the current nine bands to five bands for better understanding of tariff structure.

On the other hand, it noted that commercial consumers will experience an average increase of 16.85 per cent, ranging from 1.2 per cent to about 18 per cent.

As for industrial consumers, the company said they will experience an average increase of 16.85 per cent, ranging from 0.9 per cent to about 17 per cent.

Likewise, it pointed out that special industrial tariff ( SIT) consumers will experience an increase of about 19 per cent.

It said this is in line with the government’s effort to gradually reduce subsidies to industries. Even with the increase, TNB said SIT consumers will continue to enjoy discounted tariff rates, as compared to the rates for normal Industrial consumers.

Meanwhile, it said the 10 per cent discount on electricity bills currently enjoyed by government schools, government institutions of higher learning, places of worship and welfare homes registered with the government and educational institutions partly-funded by the government will be maintained.

It added that the 10 per cent discount will also be extended to the universities teaching hospital under the Ministry of Education for example, Universiti Sains Malaysia, University Kebangsaan Malaysia Univerisity Malaya.

TNB noted that SIT for water and sewerage operator will be given automatically and the electricity rebate by the government for domestic consumers with monthly bill of RM20 or lower will be maintained.

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