KUALA LUMPUR (Oct 14): Malaysian Government-controlled utility Tenaga Nasional Bhd (TNB) expects to recover RM5.8 billion between July and December 2022 under its electricity generation cost recovery scheme based on the imbalance cost pass-through (ICPT) mechanism.
"The ICPT mechanism allows TNB to remain neutral to fuel price vagaries, as it allows us to pass through any variations in generation cost in the form of rebates or surcharges," TNB said in its latest corporate presentation.
"In upholding the ICPT mechanism, we will explore all options for cost recovery in our proposals to the Government.
"The final decision on the form of recovery will be decided by the Government," it said.
Separately, a company spokesperson confirmed that the TNB has received a collective RM2.9 billion in the period between July and September, out of the anticipated RM5.8 billion to be recovered.
According to the company, the ICPT is a six-month pass-through mechanism of variations in uncontrollable fuel cost and other electricity generation-specific costs incurred by the utility for the preceding six-month period.
It said a surcharge is incurred whenever fuel and other generation costs are higher than the forecast power generation cost for the assessed period, while a rebate occurs when there are savings in fuel and other generation costs as compared to the forecast power generation cost for the reviewed period.
"The base prices of fuel (mainly coal and gas) are reviewed together with the other parameters (the base tariff, the weighted average cost of capital and so on) every three years during the regulatory period revision exercise with the Energy Commission.
"The imbalance cost incurred in the current six-month period will be included in the ICPT recovery calculations for the next six months — to be tabled before the Energy Commission for discussions. The ICPT announcement will be made by the Government on a semi-annual basis," the company explained.
As the global energy crisis heightens, the Government views the impact of fuel price volatility on power generation cost seriously, TNB added.
The nation’s primary electricity provider said it is working closely with the Government to ensure vulnerable consumers' welfare is protected, while safeguarding the continuation of the incentive-based regulation (IBR) framework during these unprecedented times.
According to TNB, the IBR offers greater transparency of the cost components in consumers' electricity bills to protect their welfare.
"In spite of the current high-fuel-cost environment, we continue to be prudent and proactive in our capital management, as we continue with our capex (capital expenditure) plans.
"The Government has provided additional support in the form of government guarantees [of RM6 billion], ensuring no disruption to the nation’s electricity supply," said TNB, which allocated for 2022 capex of RM11.8 billion.
At Bursa Malaysia on Friday (Oct 14), TNB's share price closed down four sen or 0.5% at RM8.03, for a market value of about RM46.01 billion.
TNB has 5.73 billion outstanding shares, according to its latest quarterly financial report.