The Energy Commission’s latest ICPT review, points to an incrementally positive outcome for Tenaga given a significantly higher ICPT pass-through allowed relative to actual ICPT under-recovery of 27sen/kwh notes MIDF.
In summary latest ICPT decision alows surcharge for medium and high voltage non-domestic consumers to be raised from 3.7sen/kwh previously to 20.0sen/kwh – this increases effective tariff for this segment of consumers by 37%. The remaining 7.0sen/kwh will be subsidised by the Government amounting to RM1.9b. For non-domestic consumers this will not affect, including SMEs and the agriculture sector, the previous 3.7sen/kwh surcharge however remains. Domestic consumers on the other hand will continue to enjoy the current 2.0sen/kwh ICPT rebate, which means no change in effective tariff for this group of consumers.
With this exercise, a total of RM8.8b will be subsidised by the Government to maintain the tariffs for domestic consumers and low-voltage non-domestic consumers. The non-domestic consumers affected by the latest decision are estimated to account for ~45% of total demand. Coupled with a larger ICPT surcharge, the direct pass-through of Tenaga’s ICPT under-recovery this time around is much larger at an estimated RM5.0b-6.0b vs. RM1.6b previously i.e., around 34% of Tenaga’s 2H22 outstanding ICPT is estimated to be passed through to end-consumers this time vs. just 13% in the previous review, giving better cash flow visibility. While the total amount to be subsidised by the Government is still large at RM10.8b, there is now clarity on how the sizeable end-2022 outstanding ICPT of RM16b will be managed.
This contrasts with a deferred decision for an estimated sum of RM4.7b in the previous mid-2022 review. ICPT receivables as seen in 4Q22 and to ease from thereon. With clarity on Tenaga’s ICPT pass-through, MIDF is of the Tenaga’s ICPT receivables peaking in 4Q22 before easing in 1Q-2Q23, hene the house expects the previous constraint on Tenaga’s cash flows to be gradually alleviated.
