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AFA replaces ICPT effective 1 July 2025
As of July 2025, Malaysia introduced a major shift in how electricity tariffs are adjusted. The Automatic Fuel Adjustment (AFA) mechanism has replaced the previous Imbalance Cost Pass-Through (ICPT) system. This change affects everyone — from households to businesses — so here’s what you need to know.
What Is the AFA?
The Automatic Fuel Adjustment (AFA) updates your electricity tariff every month based on fuel prices (like coal and gas) and foreign exchange rates. Instead of waiting six months under the old Imbalance Cost Pass-Through (ICPT) mechanism, your bill now reflects real-time global energy and currency movements. This ensures electricity charges are more responsive, transparent, and fairly shared between consumers and utilities.
Why the Switch from ICPT to AFA?
- Frequency: ICPT updated tariffs twice a year; AFA adjusts them monthly. *In August 2025, the AFA rate is –1.45 sen/kWh — meaning you’ll see a rebate on your bill (reviewed monthly).
- Transparency: AFA provides a clearer link between fuel costs and your bill.
- Smoother impact: Instead of sudden large hikes, changes are smaller and more frequent.
AFA rate forecast
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It is predicted that September, October and November could see a rebate respectively.
How It Impacts You & Why It’s an Improvement
Whether you’re managing a home or running a business, the effects are similar:
- Monthly Adjustments: AFA updates your electricity tariff monthly to reflect the latest market conditions (for example: if fuel prices or the exchange rate rise, the tariff goes up slightly, and your bill increases. If prices drop, your bill may be lower).
- More Predictability: Smaller, more regular changes make it easier to plan ahead.
- Fairer Protection: Low-consumption households (600 kWh or less) are shielded from sudden fluctuations, while businesses get clearer visibility for budgeting.
Look at your last TNB bill. Did you notice the AFA line yet? If not, check it out — compare June vs July’s bill to see the difference.
Final Thoughts
The AFA marks a step toward a more flexible and transparent electricity market in Malaysia. By aligning tariffs with real-time fuel costs and exchange rates, it benefits both households and businesses through predictability and fairness.
For the latest updates, visit Tenaga Nasional Berhad.
Confused about what this means for your bill? Reach out — we’ll help you break it down with no obligation.
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