KUALA LUMPUR: Electricity consumers need to be mindful that rebates will not continue forever and they must brace for the possible imposition of a surcharge, said the Energy Commission (EC), Malaysia’s regulatory body for the electricity supply industry.
Noting that the Government was concerned about tariff increases, acting chief executive officer and senior director (electricity industry development and market regulation) Ir Azhar Omar said the helping hand would not last long and that Malaysians needed to be prepared for the inevitable and use electricity prudently.
“We should be imposing surcharges but out of concern for the wellbeing of the people, the Government is still using reserves to absorb the increase in costs because the funds available may not be able to cater for future needs.
“People need to be prepared,” he told Bernama Radio in an interview.
The interview on “Fixed Electricity Tariff” was broadcast on FM Radio 93.9 MHz and Facebook Live.
Azhar said it was not because the Government could not absorb the cost increase but because it preferred to use the funds for the country’s economic development, adding that the country needed a lot of financial resources to build hospitals and roads, among others.
“The role of the Commission is to ensure reliable electricity supply at reasonable prices by factoring in the costs of providing electricity and reasonable returns to the utility company, fuel supply costs and others,” he added.
The EC did not want the country’s utility company Tenaga Nasional Bhd (TNB) to profit excessively and is currently conducting an audit on the company to ensure that costs incurred during the first regulatory period were reasonable and efficient, as required.
“The first regulatory period will end on Dec 31. From Jan 1, 2018, we will begin the second revision for the second regulatory period,” said Azhar.
During the first-generation power purchase agreement, most independent power producers (IPPs) made slightly higher profits, he said.
On that basis, the Government negotiated the rate which was set earlier and many IPPs agreed to reduce the prices.
“We have collected about RM1.8bil. We have been using these funds to provide rebates and so on.
“Come December, we will still have some balance (from RM1.8bil) but from January onwards, I have to look at the revision to see whether it is an increase or otherwise,” said Azhar, adding that the EC had already used RM1.3bil out of the amount it collected.
Among the other initiatives taken to adapt to the changing global backdrop is the Imbalance Cost Pass-Through (ICPT) rebate.
“The ICPT rebate policy is to offset costs that are beyond the control of the utility company.
“It is closely related to the world’s fuel costs. If it cannot be passed on in terms of rebates or surcharges, these costs will have to be borne by the Government,” said Azhar.
For TNB to provide good service, he said it required income that could cover its costs.
“If the costs continue to escalate and income is still inadequate, TNB will wind up. If it closes down, service will decline and the Government will be forced to bail out,” he added. — Bernama
Did you find this article insightful?