The Malaysian government raised the electricity bill exemption threshold for households from 600 to 800 kilowatt-hours a month for September through December 2026, and Tenaga Nasional Bhd said it will absorb the resulting cost itself. The move is expected to cost TNB between RM120 million and RM150 million and has already triggered analyst downgrades of the utility’s stock.
Key Facts At A Glance
- Prime Minister Anwar Ibrahim announced on September 17 that the exemption threshold for domestic electricity accounts rises from 600 kWh to 800 kWh per month
- The exemption covers three bill components: the Automatic Fuel Adjustment (AFA), the RM10 monthly retail charge, and the 8% Sales and Service Tax
- The measure applies to electricity consumption from September through December 31, 2026
- TNB said on September 18 it will absorb the cost impact rather than pass it to the government or ratepayers, estimated at RM120 million to RM150 million
- The change protects roughly 90% of residential customers and more than eight million domestic users between 600 kWh and 800 kWh
- A household using 700 kWh a month will save about RM40; a household at 800 kWh saves roughly RM47
- September’s AFA rate stood at a surcharge of 3.67 sen per kWh, with forecasts of further surcharges through December
- TA Securities and UOB Kay Hian downgraded TNB following the announcement, citing an expected 2% to 3% hit to the utility’s earnings this year
Prime Minister Anwar Ibrahim announced the expanded threshold as an immediate measure to ease cost-of-living pressure, saying recent haze conditions and hotter weather had pushed household consumption above the previous 600 kWh cutoff and produced unusually high bills. The decision followed a meeting between the Ministry of Energy Transition and Water Transformation, the Energy Commission, TNB, and the Finance Ministry.
Under the earlier 600 kWh threshold, the share of households paying the AFA surcharge, retail charge, and service tax had risen to 20% in July from 13% in January, as consumption climbed. TNB said the increase reflected warmer weather, work-from-home arrangements linked to the Iran oil price shock, and higher electricity use during the 2026 World Cup.
The following day, TNB confirmed it would bear the financial impact of the wider exemption through the end of the year rather than seek recovery elsewhere. The utility noted that customers have received RM3.1 billion in AFA rebates since the mechanism’s introduction in July 2025, against RM800 million in surcharges over the same period, with the government separately channelling RM435 million through the Electricity Industry Fund to cushion earlier surcharges.
The AFA is a two-way monthly adjustment tied to fuel costs: it becomes a rebate when global fuel prices fall and a surcharge when they rise. The mechanism returned to surcharge status in May 2026 after generation costs increased following the conflict in the Middle East. Forecasts published this month point to surcharges continuing into the final quarter of 2026, including a projected +5.48 sen per kWh in December, the month the current exemption is set to expire.
Financial analysts responded within days of the announcement. TA Securities and UOB Kay Hian downgraded their outlook on TNB, projecting the exemption would shave 2% to 3% off the company’s earnings for the year, since the cost falls on more than eight million domestic accounts consuming between 600 kWh and 800 kWh monthly.
Details beyond the government’s announcement, TNB’s public statements, and the immediate analyst reaction remain limited as of this report.