Thursday May 25, 2006

Electricity up by 12%

PUTRAJAYA: Electricity tariff in the peninsula will go up by 12% from June 1.

However, the increase will not affect the low to medium income group which uses less than 200kWh of electricity per month as the existing rate of 21.8 sen per kWh remains unchanged.

Announcing the Cabinet’s decision yesterday, Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said those unaffected by the tariff increase made up 60% or 3.036 million of the 5.1million households in the peninsula.

This group, he said, paid a monthly electricity bill of less than RM43.60.

The original tariff proposal by TNB would have seen only about 40% of consumers unaffected by the increase, but the Government asked the national utility company to come up with another proposal that would see more households not having to pay more.

POWER BROKERS: Lim with TNB chairman Tan Sri Leo Moggie (centre) and TNB chief executive officer Che Khalib Mohamad Noh after announcing the new tariff structure in Putrajaya.

“TNB had asked for a 20% increase in tariff but after much deliberation the Cabinet allowed only a 12% increase,” said Dr Lim.

He said almost one million households which used up to 300kWh of electricity per month and pay between RM44 and RM70 would experience a minimal monthly increase of between 3 sen and RM3.10.

“The new tariff structure encourages consumers to conserve energy instead of using electricity as if there is no tomorrow,” he said, giving an example that consumers need not set their air-conditioner at 16°C and that 24°C was good enough.

Even with the 12% tariff increase, he said, Malaysia still had the cheapest electricity in the region with the exception of Indonesia.

In line with the Government’s policy to support the agriculture sector and modernise activities such as poultry and animal husbandry, growing of vegetables and fruits, and fish breeding – currently classified as commercial activities – Dr Lim said a special tariff which is lower than the rate for the commercial sector has been introduced.

The special industrial tariff would be retained for industrial consumers whose electricity consumption represented 5% or more of their operating costs.

Lower rates during off-peak hours between 10pm and 8am for both domestic and commercial sectors remained unchanged, he said.

Also retained is the 10% discount in electricity tariff for government schools and institutions of higher learning, welfare homes, and places of worship.

Dr Lim said TNB, which would make an additional RM1.5bil in revenue per year with the new tariff structure, would have to improve its service and reliability of supply in return for the tariff rise.

He suggested a client’s charter, and TNB to compensate consumers in the form of rebates if it failed to provide good service as agreed in the charter.

“This first increase in electricity tariff since 1997 is to offset escalating fuel costs – coal by 69%, and oil and gas by 230%, which have affected TNB,” he said, adding that the Government planned to concentrate on hydro electric power in future.

Stressing that there would be no more new gas and coal-powered Independent Power Producers (IPPs) in future, Dr Lim said the ministry was now having discussions with the existing IPPs over a supplementary agreement.

The agreement included reducing the energy reserve margin from 40% to 20% and reducing the capacity charges on TNB, currently at RM3.3bil.

The third principle was to have a bidding process for energy required above the agreed reserved margin, he said, adding that the lowest bidding price would most probably get the contract.

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