Thursday, May 18, 2006

Electricity rates -WIN-WIN for the TNB-IPPs – why?. Legal loophole – can TNB allowed more than one meter per household?


It must be a bit of relieve for Malaysian that the proposed increased in Electricity rates has been put off (see Star, Power rate put off) but not for long. The Government dare not approve the increase - coming so close to the 30 sen fuel hikes otherwise there would be more demo.

And the reason for hike? Not so much of the hike in fuel prices affecting the IPPs but the SKEWED contracts that the IPPs are holding against TNB.
There is NO official disclosure, but reports have indicated the IPPs are charging TNB “15-16 cents per kWh compared to 8 cents wholesale generation cost by TNB” and these are passed on to the consumers.

Check it out at the Asian Development Bank’s study report

Our Ministers and officials maybe are No Good in negotiating with other countries (over the scenic bridge?) but are TOO GOOD in negotiating with their own cronies and the buddies. And the same goes to the N-S tolls and other multi billion projects contracts.

Look at what Dr LKY said: “a win-win situation for both TNB and the IPPs,” and for the Rakyat?. You and I would be “pocket sakit” with full of holes.

The report specifically stated that users below RM30 would be spared the hike. How many housholds I wonder in the urban areas are consuming RM30 electricity per month?
And here is a loophole we may take advantage. Can a household be allowed to have more than one Electricity meter? Then we can have a meter in each room or one upstairs and one downstairs to make sure your bills are below RM30.
This is just wishful thinking perhaps as TNB will not entertain such a request.

Update: May 25 from AWSJ
From AWSJ May 25, 2006
Malaysia Power Rates Rise
State-Run Utility Wins First Increase In Nearly a Decade - By ELFFIE CHEW

KUALA LUMPUR, Malaysia -- Malaysia said it will raise electricity prices for the first time in nearly a decade, in a politically sensitive decision that may cause higher inflation but benefit national utility Tenaga Nasional Bhd.

The cabinet agreed to allow Tenaga to raise electricity prices an average 12% beginning June 1, the first increase permitted by the government since 1997.

In a related move, the cabinet asked independent power producers to renegotiate the price they charge when selling electricity to Tenaga. The government said that if these producers lower their rates, they can have longer-term supply contracts with Tenaga.

The higher price of electricity will add 1.5 billion ringgit ($415 million) to Tenaga's annual revenue of around 19 billion ringgit, according to Minister for Water and Power Lim Keng Yaik. "We have to allow for the increase in tariffs so that Tenaga can recover its costs," he said. "In approving the proposal the government considered the rising cost" and the need for Tenaga to invest in new equipment.

Tenaga, which supplies two-thirds of Malaysia's power and has a monopoly over distribution, had sought an increase in electricity rates to expand output, build new power plants, offset rising fuel costs and pare its 30 billion ringgit debt.

Higher power rates will reduce Tenaga's negative cash flow to 700 million ringgit from 1.38 billion ringgit in the year ending Aug. 31,said Chief Executive Che Khalib bin Mohamad Noh.

The company will continue to be cash-flow negative in 2007 because it will spend more on capital expenditure. Capital spending is estimated at five billion ringgit a year for the next five years.

The 12% price increase was less than a 20% rise Tenaga had asked the government to approve, although it was in line with investors expectations. In 1997, Tenaga raised power prices by 8.3%.

The price rise will lift Tenaga's net profit by 26% to 2.1 billion ringgit this fiscal year and by 89% to 3.7 billion ringgit the following year, brokerage firm UOB-Kay Hian said in a note to clients.

Tenaga, with a market capitalization of 35 billion ringgit, has gained 9.2% this year and last traded at 8.65 ringgit a share before trading was suspended ahead of esterday's announcement.

The electricity price rise is Prime Minister Abdullah Ahmad Badawi's second politically tough decision this year. Facing record oil prices in March, he approved a 19%-to-23% increase in the retail price of gasoline, which led to countrywide protests by opposition politicians and a quickening of inflation.

Higher power rates will add to inflation pressures, but the impact will be milder than the increase in gasoline prices, analysts said.

Citigroup economist Chua Hak Bin estimates that higher power rates will add around 0.4 percentage point to the change in June in consumer prices from a year earlier. Consumer prices rose 4.6% in April from a year earlier.
Mr. Lim, the water and power minister, stressed that average Malaysians won't be affected, as 59% of Tenaga's 6.2 million users won't see their electricity bills rise. Those with average monthly usage of less than 200 kilowatts won't be charged more, he said.


Blogger KY said...

I don't know any single household with bills lower than RM40.

3:23 PM  
Anonymous Anonymous said...

Mine is on avg RM40. Live in a 3 bedroom condo but no aircon. A fan will do. Turn off the kitchen lights when I'm in the living room. Don't leave the lights on when I'm not at home. Simple stuff like that just goes a long way....

3:06 AM  

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