KUALA LUMPUR, Dec 2 — Starting next year, the electricity tariff in the peninsula will increase by 14.9 per cent or 4.99 sen to 38.53 sen for every kilowatt per hour(kWh), and 5 sen for Sabah and Labuan.
Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili, who made the announcement today, declined to discount the possibility of further increases next year.
“This will take effect on 1st of January, any further increases after that, is for the government to consider based on what’s happening in the market place,” he said, when asked if there could be additional increases in 2014.
In the confirmation of the tariff hike consumers and business have been bracing for since Putrajaya slashed fuel subsidies in September, Ongkili explained that there will be no increase for electricity usage below 300 kWh.
“In line with the government’s policy to protect the welfare of consumers, especially low-income groups, the new tariff rates will not be revised for domestic consumers who use 300kWh per month and below,” he said, adding that this covered 70 per cent of households in the peninsula and 60 per cent of those in Sabah and Labuan.
Rebates for those will monthly bills below RM20 will continue until December 31, he added.
Ongkili said the hike in Sabah and Labuan, which will average 16.9 per cent or 34.52 sen per kWh, was needed to narrow the gap between generation costs and current tariff rates to allow Sabah Electricity Sdn Bhd to maintain its service levels.
Of the 4.99 sen increase in the peninsula, the minister said 0.9 sen or 2.69 per cent will go to cover Tenaga Nasional Berhad’s (TNB) increase in capital and other management costs; the rest was a reduction in fuel subsidies.
Sarawak’s power tariff is exempted from today’s announcement because the state’s energy sector is regulated by a state enactment, so they run power on their own, the minister said.
Ongkili said the reduction in subsidy meant an estimated RM4 billion in savings for Petronas, which in turn will translate to dividends to the government.
Despite the cut in subsidies, Ongkili said Putrajaya was still effectively losing RM14 billion each year on subsidies for power generation and rebates.
“Of this amount, RM2.4 billion annually is specifically attributed to domestic consumers using below 300kWh per month. Whereas for Sabah and WP Labuan, the total amount of subsidies for fuel oil is RM570 million annually, out of which RM155 million per year is attributed to the similar category of consumers,” he said.
He said the increase should have “a minor impact” on inflation in the short term, but said longer term impact would depend on the effectiveness of existing price controls.
When asked how this increase in electricity tariff will affect independent power producers (IPP), the minister denied that they will benefit from the adjustment.
“Price of gas to them is in the PPA as revised from time to time between [IPP] and TNB so they don’t get anything out of this. The cost of selling and cost of input are coming to them, no increase.
“So don’t say they are benefitting. A lot of the myth [says] that they are benefitting from this, nothing at all,” he said.
He also announced that there will be an increase in collection for the Renewable Energy fund from 1 per cent to 1.6 per cent effective January 1 in the peninsula.
The 1.6 per cent collection will also be introduced in Sabah and WP Labuan, and will be payable by all electricity consumers, except for domestic consumers who use less than 300kWh a month.
“The government expects utility companies to enhance efforts to improve the quality of electricity supply. At the same time, the government encourages consumers to use electricity wisely and adopt energy efficient practices in their daily lives,” the minister said.
The last increase in electricity tariff was in June 2011, when the subsidised gas price was raised to RM13.70 per million metric British thermal unit from RM10.70 mmbtu previously.
