Malaysia: Electricity Tariff Formulated Systematically Based On Actual Costs - EC

Malaysia: Electricity Tariff Formulated Systematically Based On Actual Costs
- EC

Head of Electricity Pricing Unit, Energy Development and Market Regulatory
Department, Marlinda Mohd Rosli said the tariff rate adjustment, which was
reviewed under the Imbalance Cost Pass-Through (ICPT) mechanism every six
months, was divided into three elements, including costs of supply and
capital.

"These are the costs that we will determine efficiently and transparently
through the Incentive-Based Regulation (IBR), which was introduced by the
government," she said on TV1's 'Nada Seri' programme titled "Electricity
Tariff Rebate Adjustment" recently.

Marlinda said the supply costs were made up of fuel and capital costs, among
others.

"When we set the 2014 tariff base, based on cost projections (we assume fuel
prices will go up), but Alhamdulillah since we started coal prices
decreased.

"Except during this period (coal prices) went up, but over the last three
years, fuel prices have declined. Another fuel that we are studying is
liquefied natural gas as the price has also decreased," she said, adding
that the costs incurred included infrastructure development, delivery and
distribution.

Marlinda said another element considered in fixing the tariff was
performance standards of utility companies to commensurate with the new
rates imposed.

"The objective is to ensure that the electricity tariff is fixed at a
reasonable rate and at the same time we get reasonable returns for utility
companies such as Tenaga Nasional Bhd or Sabah Electricity Sdn Bhd in
Sabah," she said.

The IBR was introduced by the EC in 2014 to improve the tariff imposition
process for consumers, as well as to enable the government to effectively
monitor the cost of electricity supply.

Through the IBR, the tariff base is set every three years, taking into
account all costs associated with generation, transmission and distribution
of electricity to enable the review of fuel costs to be made every six
months using the ICPT mechanism.

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Link to Original Article:
http://www.malaysiandigest.com/business/690301-electricity-tariff-formulated
-systematically-based-on-actual-costs-ec.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com