I refer to the Malaysiakini reports Electricity tariffs to rise by up to 20% and TNB: Power rates to be linked to fuel prices. In the first report, the PM said electricity tariff would rise by up to 20 percent. That is not true. Household electricity bills can actually rise by up to 40 percent. Any household which previously used RM174 worth of electricity (650 kWh, kilo Watt hour, or ‘unit’ of electricity), will now face a 20 percent higher electricity bill of RM209. Those previously using RM275 of electricity (1,000 kWh) will now be paying 30 percent more, or RM359. The percentage of increase approaches 35 percent for 1,300 kWh, and 40 percent for 2,000 kWh. Most consumers would have received a half-and-half, old-mixed-with-new-tariff, electricity bill last month. They are only now beginning to receive a bill that is fully based on the much higher new tariff that took effect on July 1. In your second report, TNB's CEO inadvertently revealed that those who use more than RM112 of electricity (400 kWh, new tariff) are subsidising those who use less than RM112. "Consumers using 400 units and above are not entitled to any subsidy at all," he stated. In other words, the average price at 400kWh is where TNB breaks even, hence requiring no subsidy. If he didn't ‘mis-speak’, consumers using less than 400 kWh are paying TNB below cost, those using 400kWh are paying TNB at cost, while those using more than 400 kWh are giving TNB an increasingly fat margin, of up to a 63 percent, ‘gross’ margin. If TNB breaks even at the tariff price at 400 kWh, then why keep raising the tariff beyond 400kWh? Using 400kWh means a bill of RM101 under the old tariff, and now RM112 under the new tariff. That means TNB's average cost is around 28.15 sen per unit (RM112/400 unit). Yet TNB keeps raising the unit price from 30 sen per kWh at 500kWh to 46 sen per kWh beyond 900 kWh. A tariff of 46 sen is 63 percent more than the presumable breakeven average price of 28.15 sen per unit! Why make households which use more than RM112 (new tariff) of electricity subsidise those who use less? Why portray the subsidies that are actually paid by other consumers as subsidies from TNB or the government? Why aren't consumers who spend more than RM112 made aware that they are subsidising other families? How many ‘high-usage’ families are subsidising how many low-usage families? It appears that families whose bill is RM150 (new tariff, 500kWh) are subsidising low-usage families by RM10 a month. Those whose bill is RM190 (600kWh) are subsidising others by RM20, and those whose bill is RM229 (700kWh) are overpaying and subsidising others by RM32. For example, 700kWh multiplied by an unsubsidised cost of 28.15 sen is RM197 or RM32 below the over-charged bill of RM230. If a key purpose of over-charging the ‘high’-usage families is to promote energy efficiency, then what education programmes have TNB carried out to educate the low-usage as well as high-usage families to save on energy? If conservation is the issue, why not make the tariff structure more transparent? Why not provide a tool for consumers to calculate and compare their usage and charges before and after the tariff changes? How can consumers kept in the dark about the true extent of the tariff impact become aware of the need to conserve energy? Had TNB been more transparent about the true extent of tariff rises (up to 40 percent) and the cross-subsidy among consumers (those using more than RM112 subsidising those using less than RM112 under the new tariff), there might have been more debate about the lack of conservation, and other distortions. Distortions abound whenever there are cross subsidies. For example, the over-priced tariff for large users will discourage large families, extended family houses and the caring of the old. Combined with the leeching of family finance by over-priced cars, tolled roads, overpriced Streamyx, Astro and mobile services, our apartment sizes will likely shrink and squeeze out the older folks. We are not aware of any potential long-term social and economic impacts because there is no transparency and debate. Other than splitting families into smaller units, the penalty for high- usage electricity users may discourage cottage industries and computer literacy. I have created an Excel spreadsheet to help others calculate domestic electricity charges before and after the July 1, 2008 tariff increase. The second sheet includes a comparison table and a chart. Your readers are welcome to distribute the spreadsheet. The overview article is available here. The Energy Commission has also published a consumer-awareness pamphlet about energy efficiency here but beware that the electricity prices cited are outdated. This article was originally published on Aug 12, 2008, in MalaysiaKini.com as a letter to the editor. |
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