TNB sees no hike in base tariff for the peninsula

Tariff review: Workers manning a control panel at TNB’s distribution sub-station in Bayan Lepas. The base tariff for electricity is subject to review every three years.

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) expects the electricity base tariff for Peninsular Malaysia to be maintained at the current level in the upcoming review.

According to TNB chairman Tan Sri Leo Moggie, the Government would unlikely make any changes to the current base tariff when the decision on the review is announced next month.

“We do not anticipate a (base) tariff change come January when the announcement is made,” he said at a press conference after the company’s AGM.

The base tariff for electricity is subject to review every three years. It was last revised in 2014 when the Government raised it from 33.54 sen/kWh to the current level of 38.53 sen/kWh.

The base tariff takes into account the base price for key fuel such as piped gas, coal and liquefied natural gas.

It also takes into consideration operational maintenance costs and development for the utility companies, including the “Return on Regulated Asset Base”.

Determining the electricity tariff for Peninsular Malaysia is according to the incentive-based regulation framework comprising two important components – the imbalance cost pass-through policy that is reviewed every six months, and the base tariff.

The base tariff is to cover all costs related to the supply of electricity to consumers.

TNB chief financial officer Datuk Fazlur Rahman Zainuddin stressed that the decision on the changes to the base tariff lied solely in the Government’s hands.

“Normally, the decision on the base tariff is made right before the beginning of the regulatory period, which is expected in January. So, we expect the announcement will be made anytime this month,” he said.

On the outlook on coal prices, Fazlur said it would likely moderate over the next three years. He expects them to trend slightly lower than the current high level.

“Generally, it will moderate because the expected consumption of coal is not going to push the price up too much, as the market shifts towards alternative fuels,” he explained.