1% households to pay just over RM15 million more under new 'targeted subsidy' electricity tariff

A total of 83,000 electricity users will see an increase in their electricity bills by at least RM187 per month or 25% as the government targets them for using more than 1,500 kWh or a minimum monthly total of RM708, Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad announced today. 

Under the imbalance cost pass-through (ICPT) mechanism to come into force between July and December this year, the government will receive just a little over RM15 million from these users.

Nik Nazmi said this is in line with the implementation of targeted subsidies although it is based on consumption and not economic status.

He said these households with high-volume usage will still enjoy a subsidy totalling RM58 million as the ICPT surcharge is not fully waived.

"Users will see the amount of subsidy provided by the government in their respective monthly electricity bills," he added.

He said the latest adjustments will not affect those with consumption below 1,500 kWh, which constitutes 99% of users in the peninsula.

Meanwhile, non-domestic users in the low-voltage tariff category and specific agricultural tariff will also not see an increase in their bills, with their electricity rate maintained at 3.7 sen per kWh.

Nik Nazmi said this would spare micro, small and medium enterprises such as "restaurants, retail shops, bakeries, small workshops, farmers, livestock breeders, planters and similar businesses" from any tariff hike.

He said the decrease in fuel prices from US$224 per metric ton between July and December 2022 to US$173.50 per metric ton between January and June this year has allowed the government to continue providing electricity subsidies.

"However, the average coal price is still high and exceeds the projected fuel cost set during the RP3 period, which is US$79 per metric ton," he said.

For the period of July to December, Nik Nazmi said the government has agreed to cover the electricity subsidy cost amounting to RM5.2 billion.

Prime Minister Anwar Ibrahim previously said the government would no longer bear the burden of electricity and haj subsidies for the wealthy in an effort to restructure subsidy provisions.

Nik Nazmi added that for now, the provision of electricity subsidy is based on consumption and not income levels, which will be implemented in the future.

"We are encouraging a shift towards energy conservation and more efficient usage.

"We have witnessed voltage differences for medium and high categories as well as a decrease in energy demand from commercial and industrial sectors following our previous decisions," he said.