Electricity subsidies in Malaysia may end soon – will charging EVs at home be more expensive soon? – paultan.org

The government has agreed to continue offering a two sen per kWh electricity rebate to domestic users until the end of 2022, according to a report by The Star. Speaking in the Dewan Rakyat yesterday, energy and natural resources minister Datuk Seri Takiyuddin Hassan said the decision will see the government foot a subsidy bill of RM5.8 billion from July 1 to December 31 this year.

He added that the surcharge for non-domestic users will remain at 3.70 sen/kWh, which is lower than the actual of rate of Imbalance Cost Pass-Through (ICPT) of 11.81 sen/kWh. ICPT is a mechanism under the Incentive Based Regulation (IBR) framework which allows for Tenaga Nasional (TNB) to reflect changes in fuel and other energy generation-related costs in the electricity tariff.

These costs are set based on benchmarked prices in the base tariff, and the implementation of ICPT, which is reviewed every six months, would reflect the actual costs in tariff in from of rebate or surcharge. For example, if coal and/or gas prices go up, there’s a surcharge, and vice versa.

Referring to TNB’s FAQ on ICPT, for the period of January 1 to June 30, 2022, there was an additional fuel and other generation costs amounting to RM7 billion. To cover the costs, the government allocated RM2.3 billion as well as another RM3.5 billion to ensure the ICPT surcharge is maintained for all non-domestic customers such as commercial and industrial – the total subsidy bill was RM5.8 billion.

As it stands, from July 1 to December 31, 2022, domestic customers will still enjoy an ICPT rebate of 2 sen/kWh, while non-domestic users are faced with an ICPT surcharge of 3.70 sen/kWh. However, Takiyuddin said yesterday that electricity subsidies, including those for lower income groups (E-Kasih programme), can’t go on indefinitely and may be removed in the future.

From a motoring perspective, owners of EVs and PHEVs who regularly charge their cars at home may have to pay more to “refuel” in the future should subsidies be removed. You can forecast your electricity bill using the Energy Commission’s handy online calculator and deduce how much might have to pay should the ICPT rebate be removed or switched to a surcharge.

Similarly, an even higher ICPT surcharge for non-domestic customers could result in providers of public charging facilities increasing the rates charged to users. One potential workaround is to introduce affordable EV charging rates, as proposed by prime minister Datuk Seri Ismail Sabri Yaakob during the launch of the 2022 Perodua Alza yesterday.

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