Will there be a power rates hike in November?

Will there be a new round of electricity tariff hikes in November this year?

This question was posed to Energy, Green Technology and Water Minister Peter Chin (right) at a press conference this morning, after the official opening of the 4th National Energy Forum 2012 in Kuala Lumpur.

However, Chin chose to keep mum on the question, which is deemed politically sensitive, especially with the looming general election, which must be held before June next year.

“This a question for which I, too, want to know the answer, but this is for the cabinet to decide and the cabinet has not made any decision on that matter yet,” he said.

Chin said the last revision of the electricity tariffs was in June last year, but the government has rejected any further hike since then.

“We ought to have change, but the government said no.”

The federal government agreed to adopt a ‘Fuel Cost Pass Through’mechanism last year to determine national electricity tariff rates in the future.

This is in conjunction with the reduction of natural gas subsidies provided to power producers by RM3 per mmBtu for every six months until it reaches the market level by 2016.

However, the government has since then only announced an electricity tariffs hike of an average 7.12 percent in June last year, with no further adjustment after that.

Paper presented to economic council

Chin revealed that the ministry recently presented a paper to the National Economic Council on the issue, but he refused to elaborate on its contents.

“I cannot reveal this to you,” he said when reporters asked how much was the percentage of increase proposed by the ministry.

Earlier, in his opening speech at the forum, Chin blamed the “subsidised gas price” for causing frequent disruptions to the supply of natural gas.

“The total gas consumption in the peninsula has risen by 13 percent over the last decade and the bulk is by the non-power sectors that have been driven by the heavily subsidised gas pricing.

“This has strained Malaysia’s supply infrastructure, causing frequent supply disruptions.”

Chin said there was a need for Malaysia to address the issues urgently and the country was now placing more emphasis on renewable energy sources, cheaper coal and hydro as well as nuclear power as “part of the long-term considerations”.

The next power tariff revision is expected to take place in November this year.