The way residential users will be charged for electricity in Malaysia is set to undergo a major change, with the energy commission (Suruhanjaya Tenaga, or ST) having announced earlier today that the average base electricity tariff in Peninsular Malaysia will be increased from the current 39.95 sen/kWh to 45.4 sen/kWh from July 1, 2025.
The announced rate is a fraction lower than the 45.62 sen/kWh that was approved in December 2024, and in terms of percentage, represents a 13.64% increase instead of the +14.2% that would have resulted from the previously approved rate.
The biggest change that domestic users will experience is your TNB bill with no longer be based on a tiered kWh rate, as you can see from the comparison above. The next big change is rates are going to be revised on a monthly basis based on the cost of fuel used for electricity generation, which we will explain below.
The actual new tariff rates and structure will be announced tomorrow at 12 pm on the TNB website, with an electricity bill cost estimator set to go live on the same page on June 23.
While your bills will now be presented differently, the big question of course is whether you will be paying more for your electricity consumption. By all accounts, the increase means that you should, but there are indicators that say otherwise, and there’s a silver lining for the majority of users, again as explained further below.
The change is part of the three-year Regulatory Period 4 (RP4) that runs from January 2025 to December 2027, replacing RP3 from 2022-2024. However, from January to end-June 2025, there was no change in the electricity tariff rate and tariff structure, which allowed the public half a year to adjust. The current tariff schedule has been in place since 2014.
The ST said that the tariff revision involves a restructuring of the average base tariff rate and tariff schedule as well as the implementation of an automatic fuel cost adjustment (AFA) mechanism, the latter replacing the the current Imbalance Cost Pass-Through (ICPT) system.
Under the new AFA, adjustments will be made based on monthly fuel prices and exchange rates, allowing for either a rebate or surcharge to be made on top of the base tariff, depending on actual and benchmarked fuel prices.
This means that the electricity tariff will be adjusted on a monthly basis instead of every six months, with the monthly adjustment to be carried out automatically by no more than three sen (up, surcharge or down, rebate) than the prevailing energy cost. Should it be necessary to adjust beyond the three sen ceiling, government approval will be needed.
Despite all the changes, the commission said that under the new tariff structure, more than 23.6 million domestic electricity users in the peninsular are set to benefit from fairer and more progressive rates. It added that the RP4 base tariff will result in a total cost reduction of 19% compared to it under RP3, primarily from having ICPT being replaced with the AFA.
In terms of structural changes, the new tariff will see users now being divided into domestic and non-domestic categories, based on voltage level usage (low, medium or high), while the electric bill will adopt a more detailed itemised format, reflecting actual costs across four components (energy, capacity, network and retail charges) to improve pricing clarity to users.
Of note is the introduction of an energy efficiency incentive (EEI). Domestic users who consume 1,000 kWh or less each month will be eligible for the incentive, with a downward sliding amount (as in the more the usage, the lesser the incentive). Most importantly, this group of users will not be affected by the new tariff implementation, the ST said.
Non-domestic users using under 200 kWh a month will also benefit from the EEI. Additionally, the time of use (TOU) scheme has been revised to have extended off-peak hours from 10 pm to 2 pm on weekdays and all day on weekends in order to encourage consumption during low-demand periods.
Previously, only commercial users had the option to be on TOU billing (where ETOU, or enhanced time of use, was one such system), but it now looks like domestic users will also be eligible for peak and off-peak rates, with the provision that they have a smart meter. It’s likely that more will be revealed tomorrow when TNB announces details of the new tariff structure and rates.
To preserve social welfare aspects, the government will offer special tariffs for agriculture, water services and rail operators, and also provide a 10% rebate for registered schools, places of worship and welfare homes. It will also continue the monthly RM40 electricity bill rebate programme for hardcore poor households registered under e-Kasih.
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