Pua: Why pay for high power reserve margins?

By Shazwan Mustafa Kamal, The Malaysian Insider

KUALA LUMPUR, June 24 — The government needs to explain why Malaysians should continue paying for high electricity reserve margins when countries such as Thailand, Indonesia and the United States are paying much less, Tony Pua said today.

The DAP national publicity secretary pointed out that Malaysia’s electricity reserve margin has been consistently close to 50 per cent over the past decade, while the reserve margins for Thailand and Java in Indonesia are only 25.4 and 26 per cent.

“Is the (Energy, Green Technology and Water) minister (Datuk Seri Peter Chin) claiming that both these countries, who have been attracting greater foreign direct investments than Malaysia consistently over the past five years, do not have sufficient margins?” Pua (picture) said in a statement.

He said even in the United States and Canada, the North American Electric Reliability Corporation’s (NERC) study indicated a reserve margin of 28.6 per cent despite both countries being more “advanced and developed.”

“The minister should perhaps enlighten Malaysians as to what makes Malaysia so special that Malaysians are forced to pay for electricity reserve margins which have been consistently close to 50 per cent over the past decade?” added Pua.

Chin has defended the country’s reserve margin of 45 per cent as an intended government policy to prevent any sudden rise in electricity demand.

Pua continued his attacks against Chin for saying that independent power producers (IPPs) were not being subsidised by the government.

“While the minister and the IPPs are absolutely right ‘technically’ and ‘legally’ speaking, the subsidies have allowed the IPPs to mask the high electricity prices they sell, particularly to Tenaga Nasional Berhad (TNB).

“For example, despite subsidising less in Thailand where natural gas is sold at RM23.10 per MMBTU to IPPs compared to RM13.70 per MMBTU in Malaysia, the electricity tariffs in Thailand are similar, if not cheaper than that in Malaysia… (The) average commercial tariff rate today is RM40/kWh after the recent tariff hike compared to RM38/kWh in Thailand,” Pua said.

He also said that this showed that the government was “insincere” about renegotiating the power purchase agreements (PPAs) with the IPPs.