Malaysia Electricity Subsidy: Who Gets It, How Much & How to Check
•By Pengkaji Dasar
Artikel ini juga tersedia dalam Bahasa Melayu
Loading...
Did you know that the Malaysian government spent over RM5.96 billion on electricity subsidies in the first half of 2025 alone? This subsidy ensures that 99% of domestic consumers in Peninsular Malaysia do not pay the actual cost of electricity. This article explains how electricity subsidies work, who qualifies, and how to check whether you are receiving one.
The government bears a portion of the fuel costs used by TNB to generate electricity. When the prices of natural gas, coal, and other fuels rise in global markets, the government covers the cost difference so that consumers do not have to pay the full price.
The main mechanism for distributing this subsidy is through the ICPT (Imbalance Cost Pass-Through) system, which has been replaced by AFA (Automatic Fuel Adjustment) starting July 2025.
ICPT is a mechanism under the Incentive-Based Regulation (IBR) framework that allows TNB to adjust tariffs every 6 months based on actual fuel costs. Under ICPT, consumers either receive:
For the period January to June 2025, the ICPT rates for domestic consumers are as follows:
| Consumption Level | ICPT Rate |
|---|---|
| Up to 600 kWh | Rebate of 2 sen/kWh |
| 601 - 1,500 kWh | 0 sen/kWh (exempted) |
| Above 1,500 kWh | Surcharge of 10 sen/kWh |
This means consumers who use 600 kWh or less per month receive a rebate on every unit of electricity consumed.
Starting 1 July 2025, ICPT was replaced by Automatic Fuel Adjustment (AFA), which is recalculated every month, compared to every 6 months previously. Key changes:
Since its introduction, the AFA rate has provided rebates to consumers. For example, in October 2025, the AFA rate was -6.50 sen/kWh (rebate), while January 2026 was -4.99 sen/kWh.
Electricity subsidies are targeted according to monthly consumption levels:
| Consumption Level | Subsidy Status |
|---|---|
| 600 kWh and below | Full subsidy - ICPT/AFA rebate, retail charge RM10 exemption, Energy Efficiency Incentive |
| 601 - 1,500 kWh | Partial subsidy - exempted from ICPT surcharge |
| Above 1,500 kWh | No subsidy - surcharge applied |
According to government data, 85% of households, or approximately 7.1 million consumers, are unaffected by tariff increases. Overall, 99% or 8.2 million domestic consumers still receive government subsidies in various forms.
Starting 1 July 2025, domestic electricity tariffs underwent a major overhaul. The old progressive block system was replaced with a component-based system:
| Consumption Block | Rate (sen/kWh) |
|---|---|
| 1 - 200 kWh | 21.80 |
| 201 - 300 kWh | 33.40 |
| 301 - 600 kWh | 51.60 |
| 601 - 900 kWh | 54.60 |
| 901 kWh and above | 57.10 |
Bills are now broken down into 5 main components:
| Component | Rate |
|---|---|
| Energy Charge | 27.03 sen/kWh (below 1,500 kWh) / 37.03 sen/kWh (above 1,500 kWh) |
| Capacity Charge | 4.55 sen/kWh |
| Network Charge | 12.85 sen/kWh |
| Retail Charge | RM10/month (exempted if 600 kWh and below) |
| AFA (Fuel Adjustment) | Changes monthly (exempted if 600 kWh and below) |
The new average base tariff is 45.40 sen/kWh, a 13.64% increase from 39.95 sen/kWh previously. However, with various rebates and exemptions, most households do not feel the impact of this increase.
Domestic consumers who use 1,000 kWh or less per month qualify for the Energy Efficiency Incentive, an additional rebate that reduces bills:
| Monthly Consumption | Rebate (sen/kWh) |
|---|---|
| 1 - 200 kWh | 25.00 |
| 201 - 300 kWh | 22.50 - 24.50 |
| 301 - 500 kWh | 12.00 - 21.00 |
| 501 - 600 kWh | 9.00 - 10.50 |
| 601 - 800 kWh | 4.00 - 7.50 |
| 801 - 1,000 kWh | 0.50 - 2.50 |
| Above 1,000 kWh | No rebate |
This means consumers who use 200 kWh per month actually pay an effective rate of only about 19.43 sen/kWh, far lower than the base tariff of 45.40 sen/kWh.
In addition to the general subsidy, the government also provides a special rebate for the hardcore poor:
If the electricity bill is less than RM40, the payment is RM0. If the bill exceeds RM40, the consumer only needs to pay the remaining balance.
Here are several methods to check your subsidy and rebate status:
Here is the history of government electricity subsidy allocations showing the scale of financial commitment:
| Period | Subsidy Amount |
|---|---|
| 2022 (full year) | ~RM16 billion |
| 2023 | RM7.1 billion |
| 2024 (estimate) | ~RM4.1 billion |
| H1 2025 | RM5.96 billion |
| RP3 (2022-2024) | RM20.7 billion (total over 3 years) |
The H1 2025 allocation of RM5.96 billion covers domestic subsidies, support for SMEs, and a special Sabah subsidy of RM700 million.
How does the electricity subsidy compare to other targeted subsidies?
| Aspect | Electricity Subsidy | BUDI95 (Petrol) | BUDI Individu (Diesel) |
|---|---|---|---|
| Annual amount | ~RM4-6 billion | ~RM11 billion | ~RM5 billion savings |
| Targeting method | Based on kWh consumption | MyKad at petrol pump | Cash aid of RM200 |
| Recipients | 99% domestic consumers | 16 million citizens | ~300,000 diesel owners |
| Subsidy cap | 600 kWh/month | 300 litres/month | RM200 flat |
While subsidies help, you can also reduce your electricity bill on your own:
Yes, 99% of domestic consumers in Peninsular Malaysia still receive subsidies in various forms. Only consumers who use more than 1,500 kWh per month are charged the full surcharge.
The average Malaysian household consumption is around 300-500 kWh per month. This means the majority of households fall within the fully subsidized category.
The RM10 monthly retail charge was introduced starting July 2025 as part of the new tariff structure. However, consumers who use 600 kWh and below are fully exempted.
Yes, if you have a smart meter. The ToU tariff charges a lower rate during off-peak hours (10pm - 2pm weekdays, all day on weekends) and a higher rate during peak hours.
Check your TNB bill through the myTNB portal. The bill breakdown will show the ICPT/AFA rebate received. You can also compare the effective rate with the base tariff of 45.40 sen/kWh.
Yes. Sabah receives a special subsidy with an allocation of RM700 million in 2025. Tariffs and subsidy structures in Sabah and Sarawak are managed separately from Peninsular Malaysia.
Only Heads of Household who are registered and verified in the eKasih system as Hardcore Poor. Check your eligibility at the semakanrebat.petra.gov.my portal.
The government is implementing phased subsidy rationalization under RP4 (2025-2027). The goal is to target subsidies to those who truly need them, similar to what has been done with diesel and RON95 petrol subsidies.
Malaysia's electricity subsidy is a major financial commitment by the government that benefits nearly all domestic consumers. By understanding how this subsidy works and practising efficient electricity usage, you can maximize your monthly bill savings.
Besides saving on utility bills, planning your finances wisely also includes starting to invest for the future.
Open a CDS account to start investing in Bursa Malaysia and also international stocks such as US and Hong Kong through mahersaham.com/akauncds.
Download the free Asas Saham ebook to understand the basics of investing at mahersaham.com/ebookasas.