Politics

Malaysia’s Power Tariffs Among Lowest In ASEAN Region

By Muhammad Basir Roslan

KUALA LUMPUR (Bernama) –  The COVID-19 pandemic and, subsequently, the Russia-Ukraine battle have unleashed a disaster within the international electrical energy trade which has been hit by hovering costs of fossil fuels, particularly coal, pure gasoline and petroleum.

Coal costs, for instance, have now exceeded US$200 a tonne. World crude oil costs, in the meantime, have gone previous the US$113 per barrel mark, a scenario that can proceed to drive up world coal costs.

Electricity technology prices, together with gasoline prices, at present represent over 65 % of the essential electrical energy tariff. Coal and pure gasoline are used to generate practically 93 % of electrical energy in Peninsular Malaysia. The surge within the costs of fossil fuels, particularly coal, will have an effect on the nation’s electrical energy trade, with its energy technology prices having already seen a 4.5-fold enhance.  

The strain on technology prices as a result of rise in gasoline costs is managed extra systematically with the transparency of the tariff system by means of the implementation of the Imbalance Cost Pass-Through (ICPT) mechanism which permits the prices involved to be reviewed each six months.

Through ICPT, the federal government stipulates that within the occasion of a drop in international gasoline costs and technology prices, the financial savings might be returned to the folks as an ICPT rebate. In the case of a hike in gasoline and technology prices, the additional prices might be channeled to the folks as an ICPT surcharge.

The newest ICPT adjustment for the interval from Feb 1 to June 30, 2022, permits home electrical energy customers in Peninsular Malaysia to obtain a rebate of two sen for each kilowatt-hour (kWh) of energy used, whereas a minimal surcharge of three.70 sen/kWh is imposed on industrial and industrial customers.

This surcharge was imposed following the rise in gasoline prices to RM1.67 billion for the July to December 2021 interval, whereas the typical value of coal soared to US$200/tonne.  

To be sure that home customers proceed to benefit from the two sen rebate for each kWh, the federal government has utilised funds totalling RM715 million offered by the Electricity Industry Fund.

Besides that, home customers additionally get pleasure from cross-subsidisation from the commercial and industrial sectors, putting Malaysia amongst ASEAN member states that implement this technique to cut back the burden borne by their folks.  

(Cross-subsidisation on this context refers back to the larger tariff charges paid by the non-domestic sectors to cowl the electrical energy prices of home shoppers of under 300 kWh for fairness stability.)

 

LOWEST TARIFF RATES

According to the Energy Commission (EC), one of many components for Malaysia’s low energy tariff charges is its use of an influence technology combine to provide electrical energy.

Pointing to Singapore, it stated the republic’s energy technology combine primarily constitutes pure gasoline which needs to be imported, whereas, within the case of Malaysia, its technology combine contains numerous sources of gasoline corresponding to coal, pure gasoline and photo voltaic vitality.

“The variety of its technology combine has allowed electrical energy technology prices to be extra secure in Malaysia, thus enabling it to impose tariffs at cheap charges.  

“Additionally, Malaysia’s electrical energy tariff charges use the aspect of cross-subsidisation from customers within the industrial and industrial classes to home customers for the aim of fairness.

“This has enabled Malaysia to impose tariff rates on domestic users that are lower than that charged by other ASEAN member states such as Singapore where electricity tariff rates are designed based on the actual cost or the reflective cost of electricity supply,” EC informed Bernama not too long ago.

Elaborating on this, the fee stated it regulates the electrical energy administration system within the peninsula, Sabah and the federal territory of Labuan by means of the Incentive-based Regulation (IBR) framework.

(The IBR is a part of the modernisation of the facility provide trade and it was launched to set electrical energy tariffs for Tenaga Nasional Bhd [TNB] in early 2014, NUR Power [which supplies power to Kulim High-Technology Park] in early 2017 and Sabah Electricity Sdn Bhd [SESB] in early 2022.)

“The principal goal of the IBR mechanism is to guard shoppers by guaranteeing cheap tariffs for end-users. It additionally permits utility corporations to earn an inexpensive return on funding on their energy provide infrastructure expenditure.  

“Meanwhile, the IBR framework also allows tariffs to be set in a structured, transparent and effective manner by taking into account the utility companies’ requirements for development and operational expenditure in the provision of electricity supply to consumers, subject to EC’s stringent regulatory processes,” it defined.

 

ICPT MECHANISM

Adjustments to Malaysia’s electrical energy tariffs are decided by the ICPT mechanism, which is among the many principal branches of the IBR framework.

The software of this mechanism permits utility corporations corresponding to TNB, NUR Power and SESB, as electrical energy turbines and suppliers, to find out the diploma of adjustment (enhance or lower) to uncontrolled gasoline prices within the electrical energy technology system by means of tariff changes for a interval of each six months.  

“This technique has its benefits when it comes to balancing the wants of the facility utility system and electrical energy customers in Peninsular Malaysia.

“The ICPT adjustment relies on the idea of the particular price of gasoline and electrical energy technology ought to gasoline costs decline in comparison with the projected gasoline prices through the regulatory interval. This, not directly, provides shoppers the benefit of having fun with rebates or decrease electrical energy charges.  

“If fuel costs decline, the utility companies must transfer the reduction to the users’ accounts by providing rebates. And, if fuel costs rise, then the companies concerned can transfer the increase to users’ accounts via a tariff surcharge,” defined EC.

Commenting on Malaysia being amongst ASEAN member states with the least blackouts – in accordance with the System Average Interruption Duration Index (SAIDI), Malaysia’s energy interruption averaged solely 45.25 minutes in 2021 – EC stated the scenario was made doable by Malaysia’s excessive technology reserve margin and its dependable grid system.

Apart from that, the upgrading of its 500 kV and 275 kV transmission line community has enhanced the reliability of the nation’s energy provide system. The transmission community additionally permits energy to be equipped to all load centres easily, thus diminishing the danger of blackouts.  

“Among different applied sciences utilized to cut back energy disruptions are SCADA (Distribution Automation), which is a distant operation from a management centre able to dashing up energy restoration within the occasion of any injury to TNB’s system.  

“TNB also monitors its supply lines by using drones equipped with infrared detectors and ultrasonic detectors which can detect potential damages that can cause disruptions in power supply,” it added.

 

Translated by Rema Nambiar 

BERNAMA

 



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