Power rates up 7pc June 1, gas prices also hiked

UPDATED @ 06:52:07 PM 30-05-2011

May 30, 2011
The Malaysian Insider

PUTRAJAYA, May 30 — The Najib administration announced today it will raise electricity prices by an average 7.12 per cent from June 1 in an effort to trim its burgeoning subsidy bill, but promised the hike will not affect some 75 per cent of domestic consumers.

Officials said natural gas prices would also rise by RM3.00 per mmBtu each six months until it reached market levels, according to a report by the Reuters news agency. The government said it will still spend some RM25 billion to subsidise the gas bill this year.

Power prices will now rise by as much as 2.3 sen per kilowatt hour.

The price charged by state oil company Petronas for power generation will also climb to RM13.70 per mmBtu from RM10.70, government officials said.

Ministry of Energy, Green Technology and Water Datuk Seri Peter Chin today said the 7.12 per cent increase in electricity tariffs was due to the rise in natural gas prices.

Industrial and commercial consumers will experience an average increase of 8.35 per cent in their power bills.

However, domestic consumers with a monthly consumption up to 200kWh (lifeline band), along with the next 100kWh (300kWh total), will not be affected by the tariff increase.

Domestic consumers in the 301 to 1000 kWh per month band will experience a “minimal” electricity bill increase, from RM0.07 to RM30.30.

“The lifeline band is maintained at 200kWh/month... around 3.3 million households will continue to enjoy the subsidised unit rate of 21.8 sen/kWh, and encompasses 200,000 poor households,” said Chin.

The increase will not affect 75 per cent of domestic users, he added, sparing around 44.4 million from a total 59.4 million households.

Chin also said the waiving of electricity bills for domestic users who record less than RM20 per month would cease this coming December. The government is currently spending RM122 million to provide free electricity to 900,000 users in this category.

A 10 per cent discount from the standard tariff price will be given to educational institutions which are partially funded by the government.

Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yackop said that despite the increase in gas prices, the government would still be spending an estimated worth of RM25.64 billion on gas subsidies alone this year.

He told reporters that the gas price increase is expected to cause an inflation level of 0.27 per cent this year.

“This decision is consistent with the government’s efforts in reducing subsidies in stages until it reaches a market price level,” said Nor Mohamed.