Power rates hike in June

Power rates up 7% from June 1


May 30, 2011 As part of its subsidy reduction exercise, the government has raised the rates for electricity and natural gas.



PUTRAJAYA: The government today has raised electricity tariff by 7.12% starting June 1 as part of its ongoing subsidy rationalisation exercise.

The average increase is 2.23 sen per kilowatt hour (kWh) or 7.12% to 33.54 sen kWh, from the current 31.31 sen kWh.

However, the move will not affect about 75% of the population who mainly consume less than 300 kWh per month.

This means consumers who utilise up to 300 kWh of electricity and are currently billed about RM77 monthly, will not incur additional cost.

The gas tariff for electricity and industrial sectors will rise by RM3/MMBtu every six months from June 1 to December 2015, after whiuch the price will be based on market rates.

The announcement was made at a joint press conference by Minister in the Prime Minister’s Department Nor Mohamed Yakcop and Energy, Green Technology and Water Minister Peter Chin Fah Kui.

They said the 7.12 per cent hike was due to the increase in natural gas price to the power sector, from RM10.70 million British Thermal Unit (mmBTU) to RM13.70 mmBTU.

For the 900,000 low-income domestic users, they will enjoy free electricity until Dec 31, 2011, if their monthly consumption is below RM20 per month.

The government will also ensure that Tenaga Nasional Bhd (TNB) provides a discount of 10% to partiallly-funded education institutions.

Market mechanisms

Chin also said Tenaga Nasional’s average tariff had to be reviewed upwards by 2% or 0.63 sen kWh.

“The review will enable the utility company to increase its investment in better electricity infrastruture including supply and distribution,” he said, adding that it would invest about RM4.5 billion, annually.

Chin also said that in line with the government’s effort to rationalise energy prices in accordance with global market mechanisms, the government has agreed to use the fuel-cost-pass formula to determine future tariff prices.

To encourage the use of electricity generated from renewable energy (RE), the government has also decided to impose an additional one per cent feed-in-tariff portion which will be chanelled to the RE Fund to promote the purchase.

However, Chin said the additional collection would not affect consumers whose consumption is less than 300 kWj per month.

“The government is aware this tariff adjustment will have a direct and indirect impact on all quarters.

“Against the backdrop of a challenging global economic environment like rising energy and food costs, the government needs to take responsible steps to protect the interest of the people and country in the long term,” he added.

- Bernama