Malaysia plans user-pays electricity pricing for data centres and energy-intensive industries

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Malaysia data centre electricity pricing

Highlights

Malaysia plans to introduce usage-based electricity pricing specifically for data centres and energy-intensive industries, without announcing the rates or implementation timeline.
The government said rising household bills are driven by global fuel prices, prolonged hot weather, reduced plant output, and increased reliance on imported liquefied natural gas.
Consumers are encouraged to switch to time-of-use tariff mechanisms with cheaper energy rates during off-peak hours to manage electricity demand and costs.

This article was translated from the original. Read the original version by our correspondent here.

Proposed new tariffs and policy rationale

As reported by The Edge Malaysia, Deputy Prime Minister and Minister of Energy Transition and Water Transformation Datuk Seri Fadillah Yusof told the Dewan Rakyat on Thursday that the measure is intended to ensure that businesses with high electricity consumption bear a fairer share of supply costs.

He was responding to a question from Shah Alam MP Azli Yusof on rising household electricity bills and measures to keep tariffs affordable while ensuring the sustainability of the energy industry. However, details regarding rates, consumption thresholds and the implementation timeline have yet to be announced.

Under the existing framework of Malaysia's Energy Commission, domestic and non-domestic consumers are already differentiated by tariff category, while non-domestic classifications are further divided according to supply voltage. The framework also differentiates between energy, capacity, network and retail charges, but Fadillah did not explain how the new approach would alter the current structure.

Supply cost pressures and impact on consumers

Fadillah said that part of the increase in household bills stemmed from higher global fuel prices, prolonged hot weather that increased air-conditioning use, and reduced output from several power plants. Lower hydropower generation and scheduled coal plant shutdowns have also increased reliance on imported liquefied natural gas, adding to generation costs.

Under the AFA mechanism, fluctuations in generation costs are passed through via monthly tariff adjustments. Consumers receive rebates when actual fuel and generation costs are below the tariff's base assumptions, while higher expenses trigger surcharges, subject to applicable regulatory exemptions.

At the same time, the government is encouraging consumers to manage electricity demand more efficiently through time-of-use tariff mechanisms. Under this method, participating consumers pay different energy rates during peak and off-peak periods, with peak hours running from 2 pm to 10 pm on weekdays, while all other times and weekends are considered off-peak; eligible households are urged to shift activities such as electric vehicle charging to cheaper periods.

In our earlier coverage of the Dewan Rakyat's focus on rising domestic electricity tariffs, we reported that the issue was raised during the ministerial question session, including explanations of the factors behind higher charges and mitigation measures for consumers. The article also noted the Energy Commission's assurance that around 85% of households are protected from the impact of tariff adjustments through the Energy Efficiency Incentive discussed in Parliament.

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