Tenaga Nasional Berhad Analysis

In Malaysia, a big portion of electricity is generated by fossil fuels such as coal, domestic gas and imported liquefied natural gas (LNG). Economically, when the price of these fossil fuels increases in accordance with the global fuel price movement, the electricity tariff will be significantly affected.
Due to the fluctuation of fuel price, the cost of electricity may be too high causing an unfair pricing to the consumers. As a resolution of the issue coupled with the natural monopoly market structure of Tenaga Nasional Berhad (TNB), beginning 1st January 2014, Energy Commission Malaysia (Suruhanjaya Tenaga), the regulatory instrument of energy industry has implemented Incentive Based Regulation (IBR) that enables the consumers to know the
In order to protect the lower income consumers, Tenaga Nasional Berhad (TNB) would not charge for the low-income class consumers whose consumption of electricity is bound within 200kWh per month. Naturally this aspect can only be done with certain degree of subsidies as in utilising the profits earned from the high income consumers to offset the losses from protecting the low income consumers, thus Tenaga Nasional Berhad (TNB) will still earn a positive
Nonetheless, Tenaga Nasional Berhad’s (TNB) pricing structure is regulated by government and the practice of price discrimination actually encourages consumers to save energy as the electricity tariff is simply based on the electricity usage of the consumers. Generally, the pricing strategies used by Tenaga Nasional Berhad (TNB) is aimed to maximise the firm’s profit while having the price it charges regulated by the