Tenaga Nasional Bhd chairman Tan Sri Leo Moggie does not expect electricity tariffs to come down immediately to match international pricing of gas and coal as the ICPT will reflect price change every six months from the base tariff set by the Energy Commission for the three years of 2018, 2019 and 2020. NSTP photo by SALHANI IBRAHIM

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) does not expect electricity tariffs to come down immediately to match international pricing of gas and coal.

This is because the government via the Energy Commission has set the base tariff at 39.45 sen per kWh for the three years of 2018, 2019 and 2020.

TNB, in turn, uses its Imbalance Cost Pass-Through (ICPT) mechanism to determine whether there would be a surcharge or rebate on the base price on a six-month basis.

The next tariff change facilitated by the ICPT is for the six months of July to December 2019.

“From TNB's point of view, we expect that regulation and rules to be maintained until the next scheduled meeting,” its chairman Tan Sri Leo Moggie told reporters on the sidelines of the Perdana Leadership Foundation CEO Forum 2019 organised by EY here today.

Moggie was responding to Prime Minister Tun Dr Mahathir Mohamad’s recent remarks that the government was considering reducing electricty tariffs in the wake of falling global coal and gas prices.

Of late, spot coal cargo prices for exports from Australia's Newcastle terminal have fallen by more than 30 per cent from US$118 per tonne as of July 2018, to US$79 per tonne this week.

Asian liquid natural gas (LNG) spot prices for May deliveries reportedly dropped more than 60 per cent from US$11.81 per MMBtu in September 2018 to US$4.40 per mmBtu this week.

Moggie acknowledged that eventhough there is a downtrend pattern in coal and gas pricing, the levels are still above the base tariff of 39.45 sen per kWh, set by Energy Commission, for the three years of 2018, 2019 and 2020.

The base tariff of 39.45 sen per kWh is on the assumption that the international markets pricing of coal averages at US$75 per tonne and piped gas at RM27.20 per mmBtu.

Every six months, the Energy Commission will look at the international pricing structure and compare it to the base price of generating electricity.

TNB, in turn, uses the base price for its ICPT to determine whether there would be a surcharge or a rebate. It works both ways.

“If the overall cost of fuel in the previous six months is higher than the base tariff, then TNB will place a surcharge to the consumers.

“If it is lower, consumers would enjoy rebates in the following six months,” Moggie said.

He reiterated it is up to the government to undertake any revision of the electricity tariff as it is not within TNB’s power to interfere with the government’s decision.