TNB tariff reform neutral to earnings but enhances transparency and cash flow
TENAGA Nasional Bhd (TNB) is expected to maintain earnings stability while benefiting from improved cost recovery and billing clarity under the newly announced Regulatory Period 4 (RP4) electricity tariff framework for Peninsular Malaysia.
The revised tariff, announced by the Energy Commission and published on Bursa Malaysia earlier today, will come into effect on July 1, 2025, and remain in place until December 31, 2027.
It includes a new base tariff of 45.40 sen/kWh, replacing the previous 39.95 sen/kWh, and introduces a monthly automatic fuel adjustment (AFA) mechanism in place of the current semi-annual imbalance cost pass-through (ICPT) system.
CIMB Securities views the tariff change as earnings-neutral.
'Regardless of tariff changes, the IBR framework provides regulatory adjustments such that TNB ultimately earns the regulatory rate of return (7.3%) on the regulated asset base (RAB),' the research house said in a note.
It added that the AFA 'will reflect the market fuel prices and forex on a monthly basis (instead of every 6 months),' which would help the utility better manage working capital amid fuel price volatility.
PublicInvest Research, which maintained an 'Outperform' rating on TNB with a target price of RM16, also welcomed the new mechanism.
'The AFA mechanism is expected to ease TNB's working capital requirement amid volatile fuel prices,' it said, highlighting that the structural shift allows for 'more timely cost recovery.'
The base tariff of 45.40 sen/kWh is slightly lower than the 45.62 sen/kWh announced in December 2024, and according to PublicInvest, 'the marginal reduction in base tariff is likely attributable to lower generation cost components, reflecting the decline in fuel prices observed in 1H2025.'
For residential users, the new structure is expected to be favourable, with CIMB noting that 'residential customers that use 50–900 kWh per month will see their electricity bills fall by 1–15%,' aided by Energy Efficiency Incentive (EEI) rebates of up to 25 sen/kWh.
However, customers who consume more than 1,000kWh monthly will be subject to fuel price adjustments under the AFA.
The tariff structure also introduces a revamped classification system based on voltage levels – categorising users into domestic and non-domestic groups – and breaks down charges into five components: energy, capacity, network, retail, and AFA.
PublicInvest pointed out that the change 'enhances billing transparency' and extends the time-of-use (ToU) scheme to domestic users, allowing them to optimise electricity consumption during off-peak hours.
Non-domestic customers, especially in the medium and high voltage categories, will face a higher effective maximum demand (MD) charge.
'This will incentivise large-scale commercial and industrial consumers to optimise their energy usage, particularly by reducing load during peak demand periods,' said PublicInvest.
While the new structure may introduce variability in bills for business users depending on usage profiles, peak/off-peak load patterns, and maximum demand, analysts believe it encourages long-term grid stability and sustainable electricity use.
CIMB forecasts TNB's core net profit will grow from RM4.36 billion in FY2025 to RM4.97 billion in FY2026, supported by regulated earnings and a healthy capex pipeline.
'Under RP4, the RAB is expected to grow healthily, led by a 12% higher base capex of RM26.6 billion and contingent capex of RM16.3 billion,' the firm added.
PublicInvest remains bullish on the sector, citing rising demand, TNB's RM42.9 billion planned capex, and the expansion of renewable energy initiatives.
'We maintain our Overweight rating on the sector,' it said, identifying TNB as its top pick.
TNB, in its own announcement today, reaffirmed that the implementation of RP4 supports the goals of the National Energy Transition Roadmap (NETR), and that it remains committed to ensuring a reliable and sustainable power supply for the country. — TMR
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Malaysian Reserve
6 hours ago
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TNB tariff reform neutral to earnings but enhances transparency and cash flow
TENAGA Nasional Bhd (TNB) is expected to maintain earnings stability while benefiting from improved cost recovery and billing clarity under the newly announced Regulatory Period 4 (RP4) electricity tariff framework for Peninsular Malaysia. The revised tariff, announced by the Energy Commission and published on Bursa Malaysia earlier today, will come into effect on July 1, 2025, and remain in place until December 31, 2027. It includes a new base tariff of 45.40 sen/kWh, replacing the previous 39.95 sen/kWh, and introduces a monthly automatic fuel adjustment (AFA) mechanism in place of the current semi-annual imbalance cost pass-through (ICPT) system. CIMB Securities views the tariff change as earnings-neutral. 'Regardless of tariff changes, the IBR framework provides regulatory adjustments such that TNB ultimately earns the regulatory rate of return (7.3%) on the regulated asset base (RAB),' the research house said in a note. It added that the AFA 'will reflect the market fuel prices and forex on a monthly basis (instead of every 6 months),' which would help the utility better manage working capital amid fuel price volatility. PublicInvest Research, which maintained an 'Outperform' rating on TNB with a target price of RM16, also welcomed the new mechanism. 'The AFA mechanism is expected to ease TNB's working capital requirement amid volatile fuel prices,' it said, highlighting that the structural shift allows for 'more timely cost recovery.' The base tariff of 45.40 sen/kWh is slightly lower than the 45.62 sen/kWh announced in December 2024, and according to PublicInvest, 'the marginal reduction in base tariff is likely attributable to lower generation cost components, reflecting the decline in fuel prices observed in 1H2025.' For residential users, the new structure is expected to be favourable, with CIMB noting that 'residential customers that use 50–900 kWh per month will see their electricity bills fall by 1–15%,' aided by Energy Efficiency Incentive (EEI) rebates of up to 25 sen/kWh. However, customers who consume more than 1,000kWh monthly will be subject to fuel price adjustments under the AFA. The tariff structure also introduces a revamped classification system based on voltage levels – categorising users into domestic and non-domestic groups – and breaks down charges into five components: energy, capacity, network, retail, and AFA. PublicInvest pointed out that the change 'enhances billing transparency' and extends the time-of-use (ToU) scheme to domestic users, allowing them to optimise electricity consumption during off-peak hours. Non-domestic customers, especially in the medium and high voltage categories, will face a higher effective maximum demand (MD) charge. 'This will incentivise large-scale commercial and industrial consumers to optimise their energy usage, particularly by reducing load during peak demand periods,' said PublicInvest. While the new structure may introduce variability in bills for business users depending on usage profiles, peak/off-peak load patterns, and maximum demand, analysts believe it encourages long-term grid stability and sustainable electricity use. CIMB forecasts TNB's core net profit will grow from RM4.36 billion in FY2025 to RM4.97 billion in FY2026, supported by regulated earnings and a healthy capex pipeline. 'Under RP4, the RAB is expected to grow healthily, led by a 12% higher base capex of RM26.6 billion and contingent capex of RM16.3 billion,' the firm added. PublicInvest remains bullish on the sector, citing rising demand, TNB's RM42.9 billion planned capex, and the expansion of renewable energy initiatives. 'We maintain our Overweight rating on the sector,' it said, identifying TNB as its top pick. TNB, in its own announcement today, reaffirmed that the implementation of RP4 supports the goals of the National Energy Transition Roadmap (NETR), and that it remains committed to ensuring a reliable and sustainable power supply for the country. — TMR
Malaysian Reserve
6 hours ago
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TNB confirms tariff revision and fuel cost mechanism overhaul starting July 1
TENAGA Nasional Bhd (TNB) has announced that the government has approved a new electricity tariff schedule for Peninsular Malaysia under Regulatory Period 4 (RP4), marking the first comprehensive revision since 2014. The revised schedule, approved under the Incentive-Based Regulation (IBR) framework, will take effect from July 1, 2025. It aims to offer a fairer rate structure for more than 23.6 million domestic users, according to a statement by the Energy Commission (Suruhanjaya Tenaga) under the Ministry of Energy Transition and Water Transformation (PETRA). In tandem, the government is also rolling out an enhanced fuel cost pass-through mechanism, dubbed the Automatic Fuel Adjustment (AFA), which will replace the existing Imbalance Cost Pass-Through (ICPT). TNB said the AFA mechanism preserves the neutral impact of fuel cost fluctuations on the utility's financial performance. TNB said in a Bursa Malaysia filing today that the RP4 revisions are positive for the group's role in supporting the National Energy Transition Roadmap (NETR). The utility reiterated its commitment to ensuring reliable and continuous electricity supply across Peninsular Malaysia. — TMR
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8 hours ago
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Don't Sweat It: TNB's Tariff Restructuring Could Potentially See Lower Bills For Domestic Users
Subscribe to our FREE Everybody is talking about the new electricity tariff come July. The assumption is that we need to prepare for higher bills. What's coming on 1 July, 2025 is the Electricity Tariff Restructuring . What is it? Tenaga Nasional Berhad (TNB) said: The new electricity tariff structure aims to make your bill clearer, fairer, and more reflective to actual market conditions. Among the key changes: Simplified Tariff Categories Tariff categories are now based on voltage levels instead of customer activity types (e.g., commercial, industrial). This makes the structure easier to understand: Domestic Non-Domestic: Low Voltage, Medium Voltage, and High Voltage Automatic Fuel Adjustment (AFA) This mechanism adjusts tariffs every month based on forecasted fuel prices and foreign exchange rates, according to TNB. Understanding The New Domestic Tariffs To look at the revised tariff rates a little closer, you can refer to the table provided by TNB. It shows the rate comparison between the current rate and the new rate for every 50kWh used. There is also a formula on how your bill is calculated, as well as a handy calculation tool if you'd like to estimate what your bill will be based on your tariff type (domestic or non-domestic) and your power consumption. Take note that electricity usage up to 30 June 2025, is charged based on the old tariff, and usage from 1 July 2025 onwards, will be calculated based on the new tariff. As you can see, the bill is now more transparent and you are able to view a breakdown of your bill including the Automatic Fuel Adjustment, Energy Efficiency Incentive, service tax, and other details. We've also given the calculator a try (domestic tariff type with 800 kWh consumption) to give you a better picture of what it would look like, or you could give it a go yourself With this, there's a clearer picture of your monthly power consumption and you'll be able to make more conscious decisions on your electricity usage while saving money with the ToU pricing scheme . Time of Use (ToU) Let's talk about the ToU pricing scheme now. This is not a new thing, but come 1 July, it will be rolled out to domestic users. Electric vehicle (EV) owners and high-usage households can look forward to cheaper electricity bills soon, thanks to the This is the first time ToU pricing is made available to residential users, following a restructuring of Malaysia's electricity tariff framework in line with the National Energy Transition Roadmap (NETR). The move aims to encourage energy efficiency while giving households more control over their electricity spending. What Is Time of Use (ToU) And Why Does It Matter? Under the ToU scheme, electricity is cheaper during off-peak hours—typically late at night and during the day when overall demand is low. This means households can lower their bills simply by shifting high-energy activities like EV charging, laundry, water heating, or cooking to off-peak times. On the flip side, rates are slightly higher during peak hours when national energy demand spikes, typically in the late afternoon to evening. Previously, ToU pricing was only available to commercial and industrial users. Now, it's being extended to: Domestic users (households) Non-domestic low-voltage users (e.g. small businesses) This rollout is only applicable to Peninsular Malaysia and does not apply to Sabah or Sarawak. Peak vs Off-Peak Hours Here's when electricity will be cheapest under the ToU scheme: Weekdays (Monday–Friday): Peak hours: 2:00 PM – 10:00 PM Off-peak hours: 10:00 PM – 2:00 PM (next day) Weekends (Saturday & Sunday): Off-peak all day (24 hours) That means there are 16 off-peak hours daily on weekdays, and 48 hours total on weekends to take advantage of lower rates. What Are The New Rates? If you opt in to the Domestic ToU scheme, your electricity rate will change depending on your usage and time of day: For consumption up to 1,500 kWh/month: Peak rate: 28.52 sen/kWh Off-peak rate: 24.43 sen/kWh Retail charge: RM10/month (waived if under 600 kWh) For consumption above 1,500 kWh/month: Peak rate: 38.52 sen/kWh Off-peak rate: 34.43 sen/kWh Retail charge: RM10/month These ToU off-peak rates are 2.6 sen cheaper per kWh than the standard all-day rate, which is 27.03 sen/kWh for usage below 1,500 kWh and 37.03 sen/kWh for above. What Else Is On Your Bill? Under the new tariff structure, your electricity bill will be broken down into: Energy Charge – Cost of generating electricity, including fuel Automatic Fuel Adjustment (AFA) – Adjusted monthly based on market fuel prices and currency fluctuations Capacity Charge – To cover standby generation capacity Network Charge – Cost of transmission and infrastructure Retail Charge – Admin costs (waived if your usage is under 600 kWh) There are also Energy Efficiency (EE) Incentives for customers who keep their usage below 1,000 kWh/month, and additional savings if under 600 kWh. Is It Worth It? Switching to the ToU scheme could lead to monthly savings—especially for EV owners who charge their vehicles overnight or during weekends. However, the key is usage timing. If your consumption typically happens during off-peak hours, the savings could be significant over time. That said, peak rates under ToU are slightly higher than the standard flat rate, so if you can't shift your major power use to off-peak times, you may end up paying more. Example scenarios like EV charging, heavy laundry use, or running water heaters can be scheduled for off-peak hours to maximise savings. Who Can Apply? To qualify for the ToU scheme, you must have: A Smart Meter, or A Current Transformer (CT) or Remote Meter Reading (RMR) meter You can check your meter status on the myTNB app or by visiting your local Kedai Tenaga. The ToU scheme is optional, and you must apply manually—it does not switch automatically. Visit any Kedai Tenaga outlet to request the change. Tips To Lower Your Electricity Bill Monitor your daily usage on the myTNB app Run appliances like washing machines, dishwashers, water heaters and ovens during off-peak hours Charge your EVs overnight or during weekends Keep monthly consumption below 600 kWh to waive the RM10 retail charge Consider a solar PV system if your household has consistently high usage With the ToU option, domestic customers now have more flexibility and incentive to plan their power usage wisely. Share your thoughts with us via TRP's . Get more stories like this to your inbox by signing up for our newsletter.
