Government to Decide on Proposed 14% Electricity Tariff Increase by Mid-2025

KUALA LUMPUR: The Malaysian government will determine the electricity tariff rates and structure for the 2025-2027 regulatory period (RP4) by mid-2025, according to Tenaga Nasional Bhd (TNB). In the meantime, current rates and tariff structures will remain in effect across Peninsular Malaysia.

TNB officials have stated that the base tariff rate for the RP4 period is expected to rise by 14%, bringing it to 45.62 sen per kilowatt-hour. This increase is primarily driven by projected hikes in coal prices (24%) and liquefied natural gas (LNG) prices (34%) over the next three years.

However, the government’s decision on the final tariff rate may result in either an increase or a decrease, depending on various factors and information under consideration.

Datuk Nazmi Othman, TNB’s Chief Financial Officer, emphasized that the government aims to protect consumers, noting that electricity rates for approximately 85% of households are expected to remain unchanged during the RP4 period.

Notably, about 70% of the base tariff is linked to generation costs in the power sector, which are heavily influenced by fuel prices, including coal and LNG. Currently, over 50% of the country’s generation capacity relies on coal, with around 20% coming from LNG.

TNB also announced that under RP4, the allowed capital expenditure (capex) for the period is RM42.821 billion, consisting of RM26.554 billion for base capex and RM16.267 billion for contingent capex. This significant investment is expected to stimulate the economy and support Malaysia’s energy transition agenda, enhancing the nation’s electricity network.

The allowed operating expenditure (opex) for RP4 is RM20.782 billion, which will fund essential operational and maintenance activities across TNB’s electrical infrastructure.

Following the announcement, TNB’s stock surged by 68 sen, or 4.80%, reaching RM14.86, with a market capitalization of RM86.38 billion at 3:03 pm. The stock has gained over 48% year-to-date.