The Malaysian government recently approved for a more progressive electricity tariff that will enable more than 23.6 million domestic users in Peninsular Malaysia to benefit from fairer rates starting from 1 July 2025 to 31 December 2027.
The new tariff comes under the Incentive-Based Regulation (IBR) framework and is in line with the provisions of Section 26 of the Electricity Supply Act 1990.
The electricity tariff changes for the Regulatory Period 4 (RP4) involve the restructuring of three components, namely the average base tariff rate, the new tariff schedule and the fuel cost adjustment mechanism.
According to the Energy Commission (EC), the Average Base Tariff Rate was adjusted based on the estimated cost of electricity supply for the RP4 period and is set at 45.40 sen/kWj, compared to 45.62/kWj approved in December 2024.
With this adjustment, the average overall electricity tariff cost is reduced by up to 19% compared to the Third Regulatory Period (RP3).
The introduction of the new tariff schedule includes:
- Revised user categories, which are now divided into domestic and non-domestic based on voltage usage (low, medium or high voltage).
- Charges for each component (energy, capacity, network and retail), set based on their respective cost structures.
An Energy Efficiency Incentive will be introduced to encourage the 23.6 million domestic users to use electricity prudently. Under the incentive, users that consume 1,000kWh or less will not be affected by the new tariff implementation. Non-domestic low-voltage users who consume 200kWh or below will also benefit from this incentive.
Additionally, the Time of Use (TOU) scheme has been adjusted and extended to include longer off-peak periods, namely the entire Saturday and Sunday, from 10pm-2pm on weekdays.
“This is to encourage more efficient electricity usage aligned with demand patterns, in support a more sustainable and efficient energy system. Users who shift their consumption to off-peak hours can enjoy lower bills compared to peak-hour usage,” EC explained in a statement.
To preserve social welfare aspects, the government has agreed to apply specific tariffs for categories such as agriculture, water and sewerage services, and rail/traction operators; as well as provide a 10% rebate for registered institutions of higher education, schools, welfare homes and places of worship.
It will also include the continuance of the RM40 Electricity Bill Rebate Programme that provides monthly assistance of up to RM40 for hardcore poor households registered under the e-Kasih system.
According to the EC, this comprehensive approach aims to promote energy efficiency and the uptake of renewable energy (RE) initiatives, benefitting all through a more efficient and sustainable energy system.
Apart from receiving a new, itemised electricity bill format, users are expected to remain unaffected by the new tariff schedule. Those who adopt energy-saving practices will benefit even more through the Energy Efficiency Incentives.
Meanwhile, for the energy charge component, a new and more dynamic fuel cost adjustment mechanism called Automatic Fuel Adjustment (AFA) will replace the Imbalance Cost Pass-Through (ICPT) mechanism, which allows automatic monthly adjustments of generation costs based on prevailing fuel market prices and foreign exchange rates, with updates published monthly on the EC’s official website.
Source: https://sme.asia/over-23-6-mil-malaysians-to-enjoy-fairer-rates-from-new-electricity-tariff/