Government Reviewing Electricity Tariff Mechanism to Ensure Fairer Rates for Households and Industries

KUALA LUMPUR:  The government is reviewing the electricity tariff mechanism to ensure fairer rates for domestic consumers and industrial users, including the possibility of introducing different tariff structures for the two categories.

Deputy Prime Minister and Energy Transition and Water Transformation Minister Datuk Seri Fadillah Yusof said the proposed mechanism aims to provide a more equitable pricing system while protecting household consumers and maintaining the competitiveness of industries.

“This way, there could be different rates for domestic and industrial sectors, providing a more just and fair mechanism for our users,” he said during Question Time in the Dewan Rakyat on Thursday.

Fadillah said the Energy Commission had been tasked with conducting an in-depth study on additional measures to protect consumers from rising electricity costs.

He was responding to a supplementary question from Azli Yusof (PH-Shah Alam), who asked whether the government planned to extend the 800kWh electricity subsidy threshold for domestic users in Peninsular Malaysia beyond Dec 31 this year and whether the threshold would be reviewed.

Azli also sought an explanation for the recent increase in household electricity bills.

“Shielding domestic users is our priority,” Fadillah said.

Explaining the factors behind the rising electricity costs, he said higher global fuel prices resulting from the geopolitical crisis in West Asia had contributed to increased expenses for electricity generation.

He added that disruptions to security in the Strait of Hormuz had further heightened concerns, as the strategic waterway accounts for approximately 20% of global crude oil and liquefied natural gas (LNG) trade. It is also a major route for about 40% of the fuel used by Malaysia.

Fadillah said prolonged periods of high temperatures had also led households to use high-capacity electrical appliances, particularly air conditioners, more frequently and for longer durations.

Other contributing factors included reduced hydroelectric power generation due to extended hot weather and scheduled outages at coal-fired power plants.

These circumstances had increased the operational reliance on imported LNG, pushing up fuel procurement costs for electricity generation beyond the levels projected under Regulatory Period 4.

Despite these pressures, Fadillah assured that the government would continue working to keep electricity tariffs affordable for domestic consumers while ensuring that industrial users benefited from more competitive rates compared with those in other countries.

The proposed review is aimed at balancing consumer protection with the need to maintain Malaysia’s industrial competitiveness amid volatility in global energy markets.