Government weighs tiered fuel charges for household electricity subsidies
The proposal is being studied as the expanded household exemption threshold of 800kWh approaches its December expiry.
The government is considering a tiered automatic fuel adjustment (AFA) structure to subsidise household electricity use, with implementation planned from 2027, Deputy Energy Transition and Water Transformation Minister Datuk Seri Abdul Rahman Mohamad told Dewan Rakyat.
He said the Ministry of Energy Transition and Water Transformation (Petra) and the Energy Commission (EC) were examining several proposals to revise the existing mechanism. The review comes amid high fuel costs linked to the West Asia conflict and extended hot weather. An automatic mechanism to shield consumers from sharp AFA increases will also be considered.
The AFA changes generation charges each month in line with fuel prices and other generation costs, allowing electricity charges to move higher or lower. The expanded household exemption, which raised the monthly consumption threshold to 800 kilowatt-hours (kWh) from 600kWh, is due to expire in December. Until then, consumers within the threshold are exempt from retail charges, AFA charges, and sales and service tax.
Abdul Rahman said consumption was below 800kWh for 8.8 million households, while 550,000 households used more than that threshold. Tenaga Nasional Bhd is absorbing an estimated RM120 million to RM150 million impact from the expanded household fuel surcharge exemption.
He said the Electricity Industry Fund (KWIE), set up in 2016, had helped finance subsidies and had been used to subsidise bills since May. Petra and the regulator will also review the fund because of concerns that its reserves may be insufficient.
