ELECTRICITY TARIFF HIKE: RIGHT ACTIONS FOR THE RIGHT TARGETS TO MITIGATE THE IMPACTS.

I was quite annoyed when I read statement from the YB Minister in an interview in one of the local daily newspaper on 1 December 2013 where he said that one way to mitigate the impact of the electricity tariff increase for lower income groups is through BR1M.

Why is so much attention being given to address these groups when the more reasonable solution is to redefine the meaning the low income groups with regard to electricity consumption and highlight on what exactly government will do in short and long terms to mitigate the impacts for each sector of users

When me with my EPP9 project team implemented the SAVE Rebate Program for fridge and split unit air conditioners at the ministry in 2011, the target group was consumers using between 200-400kWh per month and based on information given by TNB that time, it covered about 2.5 million domestic users in Peninsula. The rebates targeted the low middle income groups who are paying between about RM44 to RM117 per month at current tariff rates. Currently government is giving electricity for fee and spent about RM150 millions for consumers using 200kWh per month.

Now, let us look the numbers on the all types of electricity users in Peninsula in 2013 from TNB. TNB Consumers as at 2013 is about 7.8 million registered as electricity users.  The Table and Pie Chart below shows the summary based on type of users registered with TNB.

Then let’s look at the Electricity Supply Outlook Report 2013 produced by Energy Commission  for Peninsula on the demand of electricity by type of user in 2012  in the chart below.

The above charts clearly indicate that industry and commercial building users which represent only 17.5% of total registered TNB customers consumed the total of 77.7% of electricity compare to only 20.6% by domestic users which represents 82% of the total users registered with TNB.

And the above statistics from Energy Commission on the trends from 1990 and the projected demand of electricity for Peninsula until 2030 also clearly indicated, domestic users are not the biggest users of electricity and the industry and commercial building users will remain the biggest users in years to come.

The presentation by KeTTHA at the seminar on April 2013 also shared that the biggest potentials of saving is from the industrial sector compare to building and domestic sectors.

Total potential savings that will be resulted from the implementation of the much needed National Energy Efficiency Master Plan and public funds required to implement planned key energy efficiency measures is as follows:

1.  31,947 Gigawatthour and the budget required is at RM698 millions for industry sector;
2. 6,884Gigawatthour and the budget required is at RM 201 millions for building sector; and
3. 11,763 Gigawatthour and the budget required is at RM 88 millions.

These facts  clearly shows  that we should give more attention and efforts to address the right target which is definitely the industry sector to get more impacts energy savings results for the country.

By ensuring these energy guzzlers, the impact would enable us to cushion the need to increase the tariff for domestic users especially for low and medium low income groups. For the expected tariff increase, I would see it would practical and reasonable to maintain the tariff rates that cater the needs of these two groups with the ceiling quantum to be determined with consultation between relevant parties such as policy makers, TNB, regulators and consumer groups.

However I am much more saddened and disturbed just like any other stakeholders in energy efficiency 2 December 2013 at the parliament, which was also the day when the YB Minister announced the increase of electricity tariff for Peninsula and Sabah, the ministry still delayed the effort to push the National Energy Efficiency Master Plan to be considered by the cabinet. Instead  the plan has been downgrade from Master plan to just an action plan and they also claimed there are so much more inputs needed despite inputs from all stakeholders, local and international experts  and consumer groups have been gathered since 2009 until  the end of 2011. Everything just became stand still since 2012 when new officers took over the responsibilities on energy efficiency at the ministry who are now known among the industry players for their arrogance but never been brave enough  to discuss or having dialogue with others outside the ministry.

Basically, almost nothing has been done to pursue the plan by the ministry from June 2013 when the ministry made a promise at the parliament that it will presented to the cabinet by end of the 3^rd quarter of the year. And now suddenly they are telling the parliament and all Malaysians that they need more input which surely they could specify what exactly they need to complete the plan. Suddenly also they claimed that will publish the draft plan for public consultation for one month at soonest possible which has never been an issue before.

With the announcement that the electricity tariff will be increase by an average of 15% from January 2014, there is an urgent need for the government to have the energy efficiency policy with clear objectives and targets together with comprehensive plan for Malaysian users to be energy efficient as key mitigations to deal with the impacts. However, it looks like there is nothing urgent for officers in the ministry since they are still buying more and more time with delay after delay for something that is much needed by Malaysians and the country.

Whose fault that caused the delay? Not difficult to identify the root cause since on few officers in the ministry who are responsible on energy efficiency and all of them are reporting to the same boss, the Secretary General. As a Malaysian and as industry players, I am also guessing what is more to be added to the plan since it has been carefully studied, discussed and finally drafted and also evaluated and monitored by the ministry since 2009. The plan has been reviewed and also already received “endorsement” by international experts and agencies such as from Energy Conservation Centre of Japan and APEC member countries. I personally was involved in-depth with the process from the beginning from 2008 until I left the service in early 2012 and still puzzled until today when suddenly everything seems not right since the new officers took over and all seems to be blessed by the Secretary General too. What is hidden behind all this actually because I do not see credentials of these officers to review and impose their personal thoughts or agenda to the plan?

Can we just let this to continue to happen?

With the new rates will be effective from January 2014, just like few week before that and immediately after the announcement on 2 December 2013, the YB Minister, the secretary general of the ministry continue to sing the same old song by keep claiming that the new rates will not affect 70.67% of consumers in Peninsular Malaysia and 62% of consumers in Sabah and Labuan. They added that is due to no tariff increase imposed on the consumers who use electricity at a rate of, or lower than, 300kWh a month which covers 4.56 million consumers in the peninsula and 260,000 consumers in Sabah and Labuan.

They also claimed that the group most likely to be affected are those whose electricity usage is between 301 to 400 kWh and 401 to 600 kWh with the increase of bill between RM77.52 and RM128.60 and between RM129.12 to RM231.80 respectively and not including 1.6% feed in tariff).Domestic consumer with a monthly consumption of up to 200kWh will have no tariff increase.

For Commercial consumers, there will be an average increase of 16.85% and an average increase of 16.85% for industrial consumers while Special Industrial Tariff (“SIT”) consumers will face an increase of about 19%.

When the YB minister and the secretary general have been continued to give such typical and expected statements that the hike does not affect domestic users just because the rate for users using 300kWh and below remain the same, it clearly showing how much ignorance  and irresponsible they are as representative of the government. We do not need a genius or a highly qualified economist to understand the direct impacts or chain reactions due to the hike which must not be seen at the rate of electricity tariff only.

With most of industrial and building facilities in Malaysia are not energy efficient especially Malaysian owned companies, they will have to face immediate impacts from January next year the industry and commercial building sectors most likely will increase their price of goods produced and services provided to cushion the impact to sustain their businesses with profits. Finally consumers who are also domestic electricity users  will have to pay for that and therefore, such statements from the responsible ministry, it just  shows how arrogant are our policy makers and keep talking rubbish which really annoying ordinary Malaysians like most of us.

So, what need to be done?

It is crystal clear that the focus and immediate measures must be intensified for intensive energy users in industrial and building facilities instead of keep harping on domestic users to save more energy since the impact will be big enough. The priority must be right to target the right groups to ensure bigger and quicker impacts in a short term and to sustain results in a long term.

So, to the honorable YB Minister and the Secretary General, do the right thing for the people and the country within the powers given with the obligations that you need to fulfill with those powers. Do not forget the responsibilities that have been entrusted to you in the government by all tax payers.

My sincere hope is if you are not sure or do not know what to do, please be sincere to Malaysians and the country too, just ask and we are here to help with our time and expertise to work with you.