How Malaysia’s Electricity Tariff is Determined

Naturally, everyone would think that Malaysia’s electricity tariff is set by Tenaga Nasional Berhad (TNB). However, it is actually determined by our Malaysian Government through the Energy Commission (EC). In 1 January 2014, the EC introduced the Incentive Based Regulation (IBR), which is a mechanism that ensures prices of electricity remains fair. IBR achieves this by splitting electricity to two parts:

  1. Base Tariff – which is a tariff that is fixed for three years.
  2. Imbalance Cost Pass Through (ICPT) – which is a tariff that is reviewed every 6 months, and it is adjusted according to the global fuel (coal and gas) fluctuations.

Watch a video here by TNB for more info on how Malaysia’s electricity tariff is determined.

Who is affected by ICPT?

In general, only commercial and industrial TNB users are charged with ICPT. Residential users are currently being subsidised by Kumpulan Wang Industri Elektrik (KWIE) for users who consume not more than 300 kWh of electricity a month.

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