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All You Need To Know: Electricity Targeted Subsidy Malaysia

2024 seems to be the year our government finally moves towards a targeted subsidy system instead of the overall blanket subsidy system it has been practising for years. 

Among those targeted subsidies is electricity. In this article, let’s find out everything you need to know about the latest electricity targeted subsidy in Malaysia.

Electricity Targeted Subsidy Malaysia

The Big Announcement

On December 22, 2023, the Energy Commission announced a revision in electricity tariffs effective from January 1 to June 30, 2024. This change is due to the Imbalance Cost Pass-Through (ICPT) mechanism, part of the Incentive Based Regulation (IBR) framework. 

The ICPT allows TNB, the utility provider, to adjust electricity tariffs in response to fluctuating fuel and generation costs. These adjustments occur every six months and can result in either rebates or surcharges.

What Does This Mean for Consumers?

For domestic users consuming up to 600 kilowatts per hour (kWh), a 2 sen rebate per kWh remains in place. Those using between 600 kWh and 1,500 kWh will not face any surcharge, but users above 1,500 kWh will continue to be charged a surcharge of 10 sen per kWh

For instance, usage of 1,500 kWh would lead to an electricity bill of RM738.20. 

TNB ICPT electricity tariff

Non-domestic users in sectors like commercial, low voltage industrial, specific agriculture, water, and sewerage will see a continued surcharge of 3.70 sen/kWh. Other non-domestic categories will incur a surcharge of 17 sen/kWh.

The Broader Impact Of The Electricity Targeted Subsidy in Malaysia

This tariff adjustment means that about seven million domestic consumers in Peninsular Malaysia won't see changes in their electricity bills. The commission notes that roughly 99%, or 8.2 million domestic users, will continue to enjoy government subsidies. However, non-domestic users will continue to bear the surcharges.

How Does ICPT Work?

The ICPT charge applies to each kWh consumed, varying based on monthly electricity usage. 

It's calculated by multiplying the monthly consumption in kWh by the ICPT rate (sen/kWh), then added to or subtracted from your bill.

What If You Have A Solar Panel At Home?

Customers with solar systems, including Net Energy Metering (NEM) and Self-Consumption (SelCo), are not exempt from ICPT. 

The calculation for them is based on their imported consumption from the grid, especially during non-solar generating hours.

What I Think Of The Electricity Targeted Subsidy In Malaysia

Personally, I think the government's approach in revising electricity tariffs is a necessary step towards a more sustainable and economically viable energy sector. The tiered system for domestic users seems fair, as it encourages energy conservation among higher-income households (typically the T20), who are more likely to use energy-intensive appliances.

However, I believe there should be more incentives for renewable energy adoption. While it's understandable that solar panel users are subject to ICPT, offering additional benefits or subsidies could accelerate the transition to greener energy sources. This approach would not only benefit the environment but also reduce the long-term energy costs for consumers.

As consumers, we need to adapt to these changes proactively. This could mean becoming more energy-conscious, investing in energy-efficient appliances, or even considering renewable energy sources like solar panels. Our choices can significantly impact our electricity bills and the environment.

For more information, visit the TNB website.

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