Think You Know What Goes Into Malaysia's Electricity Tariff? We Help You Break It Down

Fun fact: TNB isn't the one who sets the electricity tariff in Malaysia!

Cover image via Penn State & Market Talk News

Every day, you turn on your lights, fans, and air-conds without a second thought. But have you ever wondered where your electricity comes from?

Image via Giphy

Electricity is distributed by Tenaga Nasional Berhad, or TNB, in the whole of Peninsular Malaysia. While Sabah and Sarawak have their own electricity distributors, TNB is the primary source of electricity in Malaysia.

For a simple light bulb to light up, electricity needs to be generated, transmitted, and distributed to your home

Image via Penn State

TNB needs to first generate energy by burning fuel or coal at their power plants. From there, electricity is transmitted via transmission lines before being distributed to your individual homes.

This entire process involves infrastructure, raw materials, and operational costs, which is what goes into the electricity tariff in Malaysia. In simple terms, the electricity tariff covers all the costs of bringing electricity to your doorstep.

Think you know all about Malaysia's electricity tariff? Here are a few common questions and misconceptions you should be aware of:

1. Who determines the electricity tariff?

Short Answer: The government, with the help of the Energy Commission.

Contrary to popular belief, TNB does not play a role in determining the electricity tariff in Malaysia. The government via the Energy Commission does so, based on the incentive-based regulation (IBR) framework. The Energy Commission is mandated to set the tariffs and regulate the industry.

The current base tariff has been set as 39.45 sen/kWh for 2018, 2019, and 2020 by the government.

2. What exactly is the electricity tariff and ICPT?

Short Answer: ICPT determines if there's a surcharge or rebate for the tariff.

The electricity tariff is divided into two parts, the base tariff and Imbalance Cost Pass-Through (ICPT). The base tariff is fixed and will remain the same for three years at a time. On the other hand, ICPT is reviewed every six months depending on global fuel price fluctuations. Global fuel prices are determined by the forces of supply and demand of the product.

If the fuel price goes up, you’ll likely get a surcharge. However, if the fuel price goes down, you’ll get a rebate. To illustrate the fact, consumers have enjoyed RM6.3 billion in rebates since the implementation of ICPT in 2014.

3. How many Malaysians are affected by the ICPT?

Short Answer: Last time, ICPT only affected 20% of Malaysians (non-domestic consumers).

If there is an ICPT surcharge, generally it has been commercial and industrial customers that have been affected. The domestic consumers (with monthly consumption of 300kWh and below) are usually paid for by Kumpulan Wang Industri Elektrik (KWIE) up to RM308 million.

Malaysians who are underprivileged and registered in the e-Kasih system are also eligible to receive monthly electricity bill subsidies of up to RM40.

4. Why then, is my electricity bill going up?

Short Answer: It is likely not due to electricity tariffs, but lifestyle changes.

Do you have more devices (laptops, phones, TVs) at home than you did five years ago? Have you been blasting the AC because of the hot Malaysian weather? Are you using old electrical appliances at home?

Most likely, your electricity bill is not going up because of the electricity tariff, but due to lifestyle changes. All the above can contribute to higher energy consumption, which is why it’s important to be aware of how you use electricity at home.

5. How does the electricity tariff affect my electricity bill?

Short Answer: (Electricity tariff) x (Your monthly consumption) = (Your electricity bill)

You will be charged on different tiers depending on how much electricity you consume and whether you're a domestic, industrial, or commercial consumer. To estimate your electricity bill, try out this real-time electricity bill calculator.

Want to learn more about electricity tariffs in less than three minutes? Watch this video by Tenaga Nasional Berhad to find out all you need to know:

To find out more info, visit TNB’s website today

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