KUALA LUMPUR – The government has yet to finalise and approve the proposed new electricity tariff schedule under Regulatory Period 4 (RP4), which is expected to take effect on July 1, 2025.
This comes as Tenaga Nasional Bhd’s (TNB) proposed increase of the base tariff to 45.62 sen per kilowatt-hour, announced yesterday, remains under review. Putrajaya is currently assessing market conditions and other relevant factors before making a decision.
During a media briefing today, TNB Group Finance Division chief financial officer Datuk Nazmi Othman clarified that the current tariff schedule, introduced in 2014, will remain unchanged until June 30, 2025.
“From now until June 30, 2025, 85% of domestic consumers will not be impacted as the current electricity tariff rate and structure remains status quo. That’s what we can say for now (as) we don’t know (the electricity base tariff and schedule the government will set).
“However, the government’s policy has always been to take care of certain consumer groups which are assisted by the government. As regulators, (TNB) will advise the government,” he said.
Explaining that the base tariff proposed by TNB could potentially either decrease or increase following the government’s consideration on the matter, Nazmi said that TNB’s filing to Bursa Malaysia yesterday was a requirement for the national energy regulator as the current Regulatory Period 3 (RP3) is scheduled to end this year.
In justifying the proposed RP4 base tariff of 45.62 sen/kWh – a hike from RP3’s 39.95 sen/kWh – Nazmi said that TNB had taken into account how the cost to supply electricity is sensitive to movements in global fuel markets.
He highlighted that the Imbalance Cost Pass-Through (ICPT) mechanism ensures that TNB is kept neutral while also guaranteeing that any variation in the actual generation cost – which makes up the majority of electricity costs – is reviewed and adjusted every six months.
State-owned utility firm TNB also announced yesterday that the regulatory rate of return has been maintained at 7.3% as per RP3.
It added that the allowed capital expenditure (capex) was RM42.821 billion, which consists of RM26.554 billion base capex and RM16.267 billion contingent capex.
“The total allowed capex for RP4 is set to bring significant economic benefits towards stimulating the nation’s economy and preparing the electricity network to facilitate the nation’s energy transition agenda,” TNB said.
TNB said the decision to implement the RP4 was a testament to the government’s commitment to the Incentive-Based Regulation (IBR) framework, which has been the pillar of sustainability and stability of the electricity supply industry.
The government recently approved the implementation of RP4 under the IBR framework from January 2025 to December 2027. – December 27, 2024