“This is a 16.9 per cent increase from the current rate,” Energy, Green Technology and Water Minister Datuk Dr Maximus Ongkili said yesterday.
Maximus said after taking into consideration the need to rationalise energy subsidies and to improve the weaknesses in the current tariff structure, the government decided to review the electricity tariff in Sabah and Labuan FT.
He added that the restructuring of the electricity tariff was aimed at reflecting the true cost of electricity supply to consumers and at the same time to also enable SESB to increase investments that would improve the infrastructure in order to provide better and more reliable electricity supply in Sabah and Labuan.
Maximus in a live conferencing with SESB staff and the media here yesterday said: “The government has approved the restructuring of electricity tariff for Sabah and Labuan effective Jan 1, 2014. The restructuring of the tariff is required to close the increasing gap between generation costs and current tariff rates so that Sabah Electricity Sdn Bhd (SESB) is able to continue a reliable supply of electricity in Sabah and Labuan.
“In determining the new electricity tariff, the government has taken into consideration the needs of consumers by introducing several special initiatives and exemptions. This includes no increase in the electricity bills of domestic consumers who use 300kWh/month and below. This covers 62 per cent or more than 260,000 domestic consumers from the total 418,000 domestic consumers in Sabah and WP Labuan,” he said.
He added that the introduction of attractive peak/off-peak tariffs and Off-Peak Rider/Sunday Tariff Rider was to encourage Demand Side Management (DSM) activities and pointed out that new and existing Commercial and Medium-Voltage Industrial consumers could benefit from DSM by shifting their operations to off-peak hours or Sundays, which would potentially reduce their electricity bills.
Maximus said a discount of up to 50 per cent for Consumer Connection Charge (CCC) will be given to all new lines for commercial consumers to reduce their initial start-up costs while penalties for the Connected Load Charge were limited to five years with an exemption given for the first year.
According to him water and sewerage operators would qualify for the tariff rate under the Industrial Tariff category and special packages of 10 per cent discount for registered welfare institutions, officially-designated religious premises, higher learning institutions that were partially or fully funded by the government, as well as missionary and private schools, would continue.
“Domestic consumers who use RM20 and below will continue to be exempted from paying their electricity bills through government rebates. This will benefit approximately 70,000 consumers in Sabah and Labuan,” he said.
He explained that the current average electricity tariff was implemented on July 15 2011, when the average tariff was increased by 15 per cent from 25.50 sen/kWh to 29.52 sen/kWh.
Prior to the review in 2011, the tariff rate had remained unchanged for 25 years since 1986.
However, the tariff review in 2011 was only able to cover 80 per cent of SESB’s operation costs.
SESB’s true cost of electricity generation is 43.46 sen/kWh.
Taking into account the current fuel subsidy of 12.35 sen/kWh, SESB still absorbs 1.59 sen/kWh for each unit of electricity sold to consumers.
However, the current state of electricity supply in Sabah and Labuan has improved compared to previous years, he pointed out adding that this was due to the federal government’s efforts to provide allocations for the improvement of electricity supply in Sabah and Labuan.
This, Maximus said, could be seen in the reduction of the System Average Interruption Duration Index (Saidi), which is an index that measures the duration of electricity interruption experienced by a consumer in a year.
In 2009, Saidi in Sabah was 2,867 minutes/customer, and with concerted efforts taken by the government and SESB, the Saidi was reduced to 687 minutes/consumer in 2010 and 557 minutes/consumer in 2012, he said.
Through ongoing efforts and assistance by the government, it is targeted that Saidi will improve this year to less than 450 minutes/consumer/year.
According to Maximus, the encouraging performance of Saidi was the result of investments by the government to strengthen all segments of the electricity supply industry, which includes the generation, transmission and distribution sectors.
Therefore, the restructuring of the tariff is necessary to enable SESB to continue providing reliable and sufficient electricity supply with support from the federal government, he said, and disclosed that from the 8th to the 10th Malaysia Plan, the federal government had allocated RM3.352 billion in the form of grants and soft loans to develop the electricity infrastructure in Sabah and Labuan.
Maximus said fuel for electricity generation in Sabah currently depended on diesel and medium fuel oil (MFO).
“The global market price for these fuels has reached approximately US$110 per gallon compared to US$20 per gallon in the 1980s. This has resulted in an increasing gap between generation costs and the revenue from electricity sales.
“The difference between the market price of fuels and the price paid by SESB has been borne by the federal government. The total cost of fuel subsidies given by the federal government to SESB from 2005 to October 2013 amounted to RM4.617 billion. In addition, Tenaga Nasional Berhad (TNB) has also channelled RM1.8 billion worth of financial assistance to SESB since 1998,” he said.
Maximus added that in order to enhance the promotion of Renewable Energy (RE) in Sabah’s electricity generation, the collection for the RE fund for the Feed-in-Tariff (FiT) fund would be introduced at a rate of 1.6 per cent of the monthly bill effective Jan 1, 2014.
However, domestic consumers who used 300kWh and below would be exempted from having to contribute to the FiT fund, he said.
“Considering SESB’s challenging financial situation, the government will continue to give SESB exemptions on sales tax, import duties for capital goods, equipment, machinery as well as replacement parts for the development and maintenance of the electricity supply system,” he stressed.
“Federal government assistance is still needed to help SESB carry out new infrastructural projects, including the Southern Link Transmission Line as well as other critical transmission projects from 2014 to 2016.
“Towards this end, the federal government has agreed to allocate RM1.812 billion in grants to implement the said critical projects. Besides that, the government has also allocated RM230.6 million during the period 2013-2014 to finance projects aimed at improving Saidi throughout Sabah.
“The government will continue to provide the fuel subsidy to the tune of RM570 million in 2014. Out of this, RM155 million/year is attributed to domestic consumers in the 0-300kWh/month category.
“The subsidy of 33.09 sen/kWh will be maintained for domestic consumers under the 0-200kWh/month category, equivalent to 186 per cent of the average tariff for that consumer category.
Likewise, the government will also provide a subsidy of 30.04 sen/kWh or 144 per cent of the average tariff to domestic consumers in the 201-300kWh/month bracket.
Maximus added that with this approved restructuring of the electricity tariff, the government hoped that SESB would continue efforts to improve the quality of electricity supply.
“At the same time, the government hopes consumers will use electricity wisely and adopt energy efficient practices in their daily lives. This is in keeping with the nation’s policy of encouraging sustainable and efficient electricity usage,” he said.
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