Global Fuel Price Surge Pushes Up Electricity Generation Costs – DPM Fadillah

KUALA LUMPUR, Oct 15 (Bernama) -- The surge in global fuel prices following geopolitical tensions in West Asia, particularly security disruptions in the Strait of Hormuz, has caused gas and coal costs in the second and third quarters of 2026 to rise well above baseline prices.

Deputy Prime Minister Datuk Seri Fadillah Yusof said fuel costs had far exceeded the baseline prices set under the Incentive-Based Regulation (IBR) framework for the fourth regulatory period (RP4), covering 2025 to 2027. “The surge in fuel prices has increased electricity generation costs in Peninsular Malaysia, which is reflected in the Automatic Fuel Adjustment (AFA) surcharge rates in consumers’ electricity bills,” he said during Ministers’ Question Time in the Dewan Rakyat today.

He was responding to a question from Azli Yusof (PH-Shah Alam) on the main factors behind the recent sharp increase in household electricity bills and how the situation aligns with the Energy Commission’s (ST) assurance.

Fadillah, who is also Energy Transition and Water Transformation Minister, said other factors contributing to the sharp increase in household electricity bills included prolonged hot weather and reduced generation capacity at some power plants.

“Due to the current prolonged hot weather, the frequency and duration of using high-capacity electrical appliances, particularly air conditioners, have increased significantly. At the same time, reduced hydropower generation due to prolonged hot weather, as well as planned outages at coal-fired power plants, have increased operational reliance on imported liquefied natural gas (LNG).

“As a result, fuel procurement costs for electricity generation during the crisis have been higher than those projected under RP4,” he said.

Fadillah said the government is taking seriously the increase in electricity bills faced by some domestic consumers in Peninsular Malaysia.

“The government’s main priority since the onset of the global supply crisis has been to ensure that the increase in costs is not borne entirely by the people. Therefore, on Sept 18, 2026, the government announced an expansion of electricity bill protection for domestic consumers, effective from Sept 1 to Dec 31, 2026.

“In this regard, domestic consumers with monthly electricity consumption of up to 800 kilowatt-hours (kWh), equivalent to estimated monthly bills of RM328 or less, are fully exempted from the AFA surcharge adjustment, Sales and Service Tax (SST) and retail charges,” he added.

Fadillah said the measures would benefit about eight million domestic consumers, representing 90 per cent of domestic consumers in Peninsular Malaysia, in line with the ST’s assurance in April 2026 that at least 85 per cent of domestic consumers would remain protected.

“Consumers with monthly electricity consumption below 1,000 kWh are eligible for rebates under the energy efficiency incentive scheme introduced as part of the new tariff structure, which took effect on July 1, 2025. The incentive aims to encourage energy-efficient electricity consumption,” he added.

-- BERNAMA