The power tariff for consumers in Peninsular Malaysia will be reduced by 2.25 sen/KWH from March 1 to June 30 this year following a review of fuel and other generation costs.

Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said this was decided during the Cabinet meeting today after it was informed that the cost of Imbalance Cost Pass-Through (ICPT) savings could be passed on to consumers in the form of cheaper tariff amounting to RM726.99 million after taking into account the drop in global fuel prices and generation costs.

He said the savings of ICPT costs would reduce the electricity bill for domestic users using in excess of 300 kWh a month and all consumers in other categories such as commercial and industry.

“Nevertheless, domestic consumers using below 300kWh of electricity a month are not affected by the decision,” he told a media conference related to ICPT and electricity tariffs here today.

The ICPT mechanism allows Tenaga Nasional Berhad (TNB) to reflect changes (either an increase or reduction) of the uncontrollable fuel costs in the electricity tariff every six months. In the event of a reduction in fuel costs, TNB will also pass-through the reduction to customers.

Following the move, he said domestic users could see savings from RM13.50 to RM45 in their monthly bills.

“The savings will depend on the amount of (electricity) usage,” he said.

Ongkili said the basis of the ICPT savings totalling RM726.99 million among others was due to greater usage of coal as fuel as compared other fuels like Medium Fuel Oil (MFO) and distillates, besides coal-fired plants being more efficient in power generation.

He said the ICPT cost saving was translated into a tariff reduction of 2.25 sen/kWH which amounted to 5.8 per cent of TNB’s average tariff of 38.53 sen/kWH.

On domestic users using less than 300kWH monthly, he said they were not affected by the reduction because the Lifeline Band 0-200kWH had remained at 21.8 sen/kWH since 1997 while for the 201-300kWH band, the rate had been maintained at 33.4 sen/kWH since 2009.

“There about one million domestic users in the lifeline band with monthly bills RM20.00 and below which are borne by the government. As such, they are not involved in the tariff reduction,” he said.

In the meantime, Ongkili said the Cabinet also agreed that the average tariff rate of 34.52 sen/kWH be reduced by 1.20 sen/kWH for Sabah and the Federal Territory of Labuan for the same time period, which is a drop of 3.5 per cent from the current average tariff rate.

The decision involved all domestic users using more than 300kWH of electricity a month and all consumers in other categories such as commercial and industry, he said.

The government approved a power tariff hike in Sabah and the Federal Territory of Labuan amounting to five sen/kWH from the average rate of 29.52 sen/kWH to 34.52 sen/kWH with fuel and tariff subsidies effective Jan 1, 2014.

He said the giving of subsidy was because the revenue collected by Sabah Electricity Sdn Bhd (SESB) could not meet its operational costs.

Ongkili said the reduction in tariff meant that the Federal Government was forced to maintain the estimated annual fuel subsidy of RM260 million.

The government has also approved an allocation of RM2.3 billion in the form of grants to develop 81 electrical infrastructural projects in Sabah for the period 2015-2020 including projects to reduce SAIDI (frequency of electricity supply disruption).

Ongkili clarified that the ICPT mechanism was not implemented in Sabah and the Federal Territory of Labuan.

For Sarawak, he explained that the electricity supply industry, including issues relating to electrical tariff, was not supervised by the Ministry of Energy, Green Technology and Water, according to Section 1(2) of the Electricity Supply Act 1990 (Act 447).

Asked why the reduction was only up to June 1, Ongkili said the market was still volatile.

“The government has made a commitment of no upward review this year. We are commited to that policy. No increase this year.

“If we need further downward reviews… we will cross the bridge when the time comes,” he added.