Latest news with #AutomaticFuelAdjustment
Sinar Daily
a day ago
- Business
- Sinar Daily
Major changes coming to Malaysia on July 1: SST expansion, electricity tariff overhaul
Essential goods remain exempt from sales tax to ensure affordability for the public. Photo generated by Sinar Daily SHAH ALAM - As July 1 approaches, Malaysians are set to face several changes, including an expanded Sales and Services Tax (SST), a revamped electricity tariff structure and other key policy updates aimed at enhancing fiscal sustainability and energy efficiency. These adjustments, while designed to strengthen the nation's economy and governance are likely to have an impact on households, businesses and consumers. SST Expansion & New Service Tax - Sales tax (five to 10 per cent) broadened Essential goods remain exempt from sales tax to ensure affordability for the public. This includes unprocessed foods such as chicken, beef, seafood like tilapia and prawns and staples such as rice, oats and wheat. Other exempt items include books, school supplies, cooking oil, medicines, construction materials, fertilisers and basic food products like flour and noodles. Luxury and semi-premium goods such as abalone, lobster, quinoa, cheese and smartphones are taxed at five per cent. Some goods, including king crab, salmon and industrial machinery, will see an increase in rates to five per cent. The highest tax rate applies to luxury goods such as caviar, shark fin, alcoholic beverages, cigarettes, cigars and premium leather items. Additionally, tungsten scrap, racing bicycles and handmade artwork now fall under the 10 per cent tax bracket. - Service tax scope widened New taxable services include: Rental/leasing (commercial property, equipment) Construction (non-residential) Financial services (commissions, brokerage, fee‑based services) Private healthcare for non-Malaysians Private education/higher ed (non‑Malaysians) Businesses have until Dec 31, 2025 to comply with no penalties during transition. Overhaul of Electricity Tariff Structure The previous tiered pricing system for domestic users is being replaced by a structure with five key components: Energy, Automatic Fuel Adjustment (AFA), Capacity, Network and Retail. Energy Charge: Domestic users will pay 27.03 sen/kWh for monthly usage up to 1500kWh, and 37.03 sen/kWh for usage above 1500kWh. Capacity Charge: A fixed charge of 4.55 sen per kWh. Network Charge: A fixed charge of 12.85 sen per kWh. Retail Charge: A fixed monthly charge of RM10. What you can do Shopping: Budget for small price hikes on premium imported items like salmon and cheese. Electricity Bills: Monitor your July bill closely. Consider switching to Time-of-Use (ToU) scheme to better manage your consumption. Business Compliance: Companies affected by new service taxes should register, revise their invoicing systems and update tax compliance mechanisms promptly. Stay Informed: Watch for monthly AFA announcements from Tenaga Nasional Berhad and the Energy Commission to understand any fuel-based billing changes. More Like This
The Star
7 days ago
- Business
- The Star
New electricity tariff earnings-neutral for TNB
PETALING JAYA: The new electricity tariff schedule to be implemented from next month, which is a tariff regime change after 11 years, will be earnings-neutral for Tenaga Nasional Bhd (TNB), say analysts. The new monthly fuel cost pass-through will improve the utility giant's cash flows by reducing timing mismatches and receivables risk, they said. Last Friday, the Energy Commission (EC) announced a new electricity tariff structure, replacing the tariff regime schedule introduced in January 2014. The new framework introduces changes across three key areas, one being a lower base tariff of 45.40 sen per kilowatt-hour (kWh) under the regulatory period four (RP4), down from 45.62 sen/kWh approved in December 2024. The second change involves revised user categories which is split into domestic and non-domestic, based on voltage usage (low, medium and high). Previously, non-domestic users were classified by business segments such as commercial, industrial and timing. A new tariff category for ultra-high voltage users has also been introduced with rates of up to RM1 per kWh. The third change is the revamped fuel cost pass-through mechanism with the new Automatic Fuel Adjustment (AFA) replacing the current Imbalance Cost Pass-Through (ICPT). Notably, the AFA mechanism allows for monthly reviews instead of the previous half-yearly adjustments. CGS International (CGSI) Research said the reforms are driven by the need to ensure a more cost-reflective supply, promote greater transparency and energy efficiency and keep pace with evolving industry dynamics. The revised tariff takes effect from July 1 to Dec 31, 2027, during RP4 under the incentive-based regulation (IBR) framework. 'Overall, the revised tariff schedule is earnings-neutral for TNB, as the IBR framework largely insulates the company from demand and price risks. However, the shift to monthly fuel cost pass-through is a clear positive for group cash flows as it reduces timing mismatches and receivables risk. 'This should consequently help ease working capital requirements and improve cash flow visibility, giving management greater flexibility in managing capital expenditure (capex) and dividend payouts in our view,' CGSI Research said in a report. The research house reiterated its 'add' rating on TNB with a RM19.10 target price, as the announcement had provided clarity and restored confidence in regulatory visibility due to the six-month delay in implementation. This had raised fears of a potential downward revision in allowed returns for the company. Amid the current uncertain global macro backdrop, CGSI Research said TNB's regulated earnings base would provide investors a buffer against market volatility. Shares of TNB gained eight sen to RM14.30 at the time of writing amid a cautious market due to heightened geopolitical tension. TA Research and Kenanga Research had target prices of RM17.30 and RM17.20, respectively. TA Research said although network charges under the RP4 base tariff is lower, it believes this is spread over a higher volume projection. In addition, the base tariff only reflects RP4 base capex, while recovery of contingent capex will be structured under a different mechanism. Overall, it estimates TNB's regulated revenue to increase by an average 23% over the RP4 period. TA Research said the group's management is confident of achieving at least 60% to 70% of RP4 contingent capex to cater for the energy transition and demand growth from the mushrooming of data centres. The research house said the stock is currently cheaper than usual, trading at 5.8 times its expected 2025 earnings, compared to its historical average of 7.2 times. Meanwhile, Kenanga Research noted that electricity demand from data centre investment of over 5,000MW by 2035 is equivalent to 20% of total generating capacity in Malaysia. 'In the near term, a total of 700MW data centre is slated to come onstream by this year. This should continue to drive demand growth higher, thus improving operation efficiency and boosting TNB's non-regulated earnings,' it said.
The Star
7 days ago
- Business
- The Star
CIMB expects electricity tariff reform to have minimal inflation impact
KUALA LUMPUR: Malaysia's upcoming electricity tariff restructuring is expected to have a minimal impact on overall inflation, and its direct effect on headline consumer price index (CPI) is anticipated to be marginally disinflationary, said CIMB Investment Bank Bhd (CIMB). Based on Tenaga Nasional Bhd 's bill calculations, domestic users consuming below 1,000 kilowatt per hour (kWh) per month are expected to benefit most from discounts of 1.0-14.5 per cent, with those using under 600 kWh receiving full retail charge and services tax waivers. In a research note today, CIMB Investment Bank said it estimates that 85 per cent of residential users-equivalent to around 7.7 million households - consume less than 600 kWh, making them eligible for the full charge waiver and reinforcing the disinflationary bias. "Electricity holds a 2.7 per cent weight in the CPI basket, and with average household consumption estimated at 440 kWh, the full-year CPI impact is likely to come in slightly below -0.1 percentage point,' it added. The investment bank said the tariff also introduces targeted rebates via the Energy Efficiency Incentive, and expands off-peak hours under the Time-of-Use pricing scheme - from 10 pm - 8 am to 10 pm - 2 pm - enhancing potential savings for low- to moderate-usage households. Meanwhile, it said the trajectory of future tariffs under the Automatic Fuel Adjustment mechanism will hinge on foreign exchange movements and market fuel prices, particularly global coal and natural gas, which collectively account for around 90 per cent of Malaysia's energy mix. "While prices for both commodities remain relatively subdued versus last year, geopolitical risks could still introduce price volatility. "Nonetheless, with most households shielded and current fuel costs relatively contained, we expect the inflationary impact to remain limited,' it said. Malaysia's headline inflation eased to 1.2 per cent year-on-year in May - its lowest level since February 2021. "Given subdued inflation trends, coupled with weak external trade, we maintain our call for Bank Negara Malaysia to cut the overnight policy rate by 25 basis points to 2.75 per cent at the upcoming July monetary policy committee meeting to support growth,' added CIMB. - Bernama
Malaysian Reserve
23-06-2025
- Business
- Malaysian Reserve
TNB confirms tariff revision and fuel cost mechanism overhaul starting July 1
TENAGA Nasional Bhd (TNB) has announced that the government has approved a new electricity tariff schedule for Peninsular Malaysia under Regulatory Period 4 (RP4), marking the first comprehensive revision since 2014. The revised schedule, approved under the Incentive-Based Regulation (IBR) framework, will take effect from July 1, 2025. It aims to offer a fairer rate structure for more than 23.6 million domestic users, according to a statement by the Energy Commission (Suruhanjaya Tenaga) under the Ministry of Energy Transition and Water Transformation (PETRA). In tandem, the government is also rolling out an enhanced fuel cost pass-through mechanism, dubbed the Automatic Fuel Adjustment (AFA), which will replace the existing Imbalance Cost Pass-Through (ICPT). TNB said the AFA mechanism preserves the neutral impact of fuel cost fluctuations on the utility's financial performance. TNB said in a Bursa Malaysia filing today that the RP4 revisions are positive for the group's role in supporting the National Energy Transition Roadmap (NETR). The utility reiterated its commitment to ensuring reliable and continuous electricity supply across Peninsular Malaysia. — TMR
Rakyat Post
23-06-2025
- Business
- Rakyat Post
Don't Sweat It: TNB's Tariff Restructuring Could Potentially See Lower Bills For Domestic Users
Subscribe to our FREE Everybody is talking about the new electricity tariff come July. The assumption is that we need to prepare for higher bills. What's coming on 1 July, 2025 is the Electricity Tariff Restructuring . What is it? Tenaga Nasional Berhad (TNB) said: The new electricity tariff structure aims to make your bill clearer, fairer, and more reflective to actual market conditions. Among the key changes: Simplified Tariff Categories Tariff categories are now based on voltage levels instead of customer activity types (e.g., commercial, industrial). This makes the structure easier to understand: Domestic Non-Domestic: Low Voltage, Medium Voltage, and High Voltage Automatic Fuel Adjustment (AFA) This mechanism adjusts tariffs every month based on forecasted fuel prices and foreign exchange rates, according to TNB. Understanding The New Domestic Tariffs To look at the revised tariff rates a little closer, you can refer to the table provided by TNB. It shows the rate comparison between the current rate and the new rate for every 50kWh used. There is also a formula on how your bill is calculated, as well as a handy calculation tool if you'd like to estimate what your bill will be based on your tariff type (domestic or non-domestic) and your power consumption. Take note that electricity usage up to 30 June 2025, is charged based on the old tariff, and usage from 1 July 2025 onwards, will be calculated based on the new tariff. As you can see, the bill is now more transparent and you are able to view a breakdown of your bill including the Automatic Fuel Adjustment, Energy Efficiency Incentive, service tax, and other details. We've also given the calculator a try (domestic tariff type with 800 kWh consumption) to give you a better picture of what it would look like, or you could give it a go yourself With this, there's a clearer picture of your monthly power consumption and you'll be able to make more conscious decisions on your electricity usage while saving money with the ToU pricing scheme . Time of Use (ToU) Let's talk about the ToU pricing scheme now. This is not a new thing, but come 1 July, it will be rolled out to domestic users. Electric vehicle (EV) owners and high-usage households can look forward to cheaper electricity bills soon, thanks to the This is the first time ToU pricing is made available to residential users, following a restructuring of Malaysia's electricity tariff framework in line with the National Energy Transition Roadmap (NETR). The move aims to encourage energy efficiency while giving households more control over their electricity spending. What Is Time of Use (ToU) And Why Does It Matter? Under the ToU scheme, electricity is cheaper during off-peak hours—typically late at night and during the day when overall demand is low. This means households can lower their bills simply by shifting high-energy activities like EV charging, laundry, water heating, or cooking to off-peak times. On the flip side, rates are slightly higher during peak hours when national energy demand spikes, typically in the late afternoon to evening. Previously, ToU pricing was only available to commercial and industrial users. Now, it's being extended to: Domestic users (households) Non-domestic low-voltage users (e.g. small businesses) This rollout is only applicable to Peninsular Malaysia and does not apply to Sabah or Sarawak. Peak vs Off-Peak Hours Here's when electricity will be cheapest under the ToU scheme: Weekdays (Monday–Friday): Peak hours: 2:00 PM – 10:00 PM Off-peak hours: 10:00 PM – 2:00 PM (next day) Weekends (Saturday & Sunday): Off-peak all day (24 hours) That means there are 16 off-peak hours daily on weekdays, and 48 hours total on weekends to take advantage of lower rates. What Are The New Rates? If you opt in to the Domestic ToU scheme, your electricity rate will change depending on your usage and time of day: For consumption up to 1,500 kWh/month: Peak rate: 28.52 sen/kWh Off-peak rate: 24.43 sen/kWh Retail charge: RM10/month (waived if under 600 kWh) For consumption above 1,500 kWh/month: Peak rate: 38.52 sen/kWh Off-peak rate: 34.43 sen/kWh Retail charge: RM10/month These ToU off-peak rates are 2.6 sen cheaper per kWh than the standard all-day rate, which is 27.03 sen/kWh for usage below 1,500 kWh and 37.03 sen/kWh for above. What Else Is On Your Bill? Under the new tariff structure, your electricity bill will be broken down into: Energy Charge – Cost of generating electricity, including fuel Automatic Fuel Adjustment (AFA) – Adjusted monthly based on market fuel prices and currency fluctuations Capacity Charge – To cover standby generation capacity Network Charge – Cost of transmission and infrastructure Retail Charge – Admin costs (waived if your usage is under 600 kWh) There are also Energy Efficiency (EE) Incentives for customers who keep their usage below 1,000 kWh/month, and additional savings if under 600 kWh. Is It Worth It? Switching to the ToU scheme could lead to monthly savings—especially for EV owners who charge their vehicles overnight or during weekends. However, the key is usage timing. If your consumption typically happens during off-peak hours, the savings could be significant over time. That said, peak rates under ToU are slightly higher than the standard flat rate, so if you can't shift your major power use to off-peak times, you may end up paying more. Example scenarios like EV charging, heavy laundry use, or running water heaters can be scheduled for off-peak hours to maximise savings. Who Can Apply? To qualify for the ToU scheme, you must have: A Smart Meter, or A Current Transformer (CT) or Remote Meter Reading (RMR) meter You can check your meter status on the myTNB app or by visiting your local Kedai Tenaga. The ToU scheme is optional, and you must apply manually—it does not switch automatically. Visit any Kedai Tenaga outlet to request the change. Tips To Lower Your Electricity Bill Monitor your daily usage on the myTNB app Run appliances like washing machines, dishwashers, water heaters and ovens during off-peak hours Charge your EVs overnight or during weekends Keep monthly consumption below 600 kWh to waive the RM10 retail charge Consider a solar PV system if your household has consistently high usage With the ToU option, domestic customers now have more flexibility and incentive to plan their power usage wisely. Share your thoughts with us via TRP's . Get more stories like this to your inbox by signing up for our newsletter.
