KUALA LUMPUR: The electricity tariff hike ranging from 4.2 to 6 percent for 1.2 million households starting January 1 is expected to influence the country's inflation rate and contribute to a marginal increase in the cost of living.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said the impact on the inflation rate and cost of living will be there, but it will not be significant.
"I believe that there will be a slight increase on the inflation rate and cost of living.
"Households need to manage their electrical consumption better by using energy efficient appliances and to reduce wastages.
"If they can manage their electrical consumption behaviour better, they will fall under the lower category, below 600 kWh and able to receive the rebate of two sen per kWh," he told Business Times.
Starting from Jan 1, approximately 1.2 million households with a monthly electricity bill of at least RM220 will experience a rise in their bills by 4.2 to six per cent.
This adjustment is part of the government's strategy to implement targeted subsidies.
As a result, affected households should anticipate an additional monthly expenditure ranging from RM12 to RM32 for electricity.
The government anticipates savings of RM266.2 million in subsidies through this measure.
The Energy Transition and Public Utilities Ministry's announcement specifies that domestic consumers using 601 to 1,500 kilowatt-hours (kWh) per month will no longer qualify for the two-sen per kWh rebate under the Imbalance Cost Pass-Through (ICPT) mechanism from Jan 1 to June 30, 2024.
The recent tariff adjustments leaves a majority of electricity consumers - 85 per cent - in Peninsular Malaysia, unaffected.
Users with electricity consumption up to 600kWh or a bill of RM219.80 and below will continue to enjoy a two-sen per kWh rebate.
The government will still fork out subsidies of RM1.9 billion to maintain the status quo for the 85 per cent.
The ministry said it will continue to progress its targeted subsidy agenda with the view that all domestic users should be imposed a surcharge in keeping with the ICPT mechanism.
Meanwhile, the RM40 Electricity Bill Rebate Programme for the hardcore poor will continue in 2024.
To promote sustainability, the government has encouraged users to continue practicing energy-efficient lifestyles and habits, utilising energy-efficient appliances.
The ministry also encouraged consumers to explore solar options for personal use or joining the Net Energy Metering 3.0 (NEM 3.0) Programme.
In line with these efforts, the Sustainability Achieved via Energy Efficiency (SAVE) 4.0 Programme initiative has been introduced, offering e-rebates for the purchase of energy-efficient equipment with a rating of 4 and 5 stars.
This programme aims to incentivise the adoption of environmentally friendly appliances, further aligning the nation with global sustainability goals.