Kuala Lumpur:The global rise in fuel prices, influenced by geopolitical tensions in West Asia and security disruptions in the Strait of Hormuz, has significantly increased the costs of gas and coal during the second and third quarters of 2026.

According to BERNAMA News Agency, Deputy Prime Minister Datuk Seri Fadillah Yusof stated that the fuel costs have exceeded the baseline prices set under the Incentive-Based Regulation framework for the period of 2025 to 2027. This has resulted in higher electricity generation costs in Peninsular Malaysia, impacting consumer electricity bills through the Automatic Fuel Adjustment surcharge rates.

In response to a question in the Dewan Rakyat, Fadillah, who also serves as the Energy Transition and Water Transformation Minister, identified additional factors such as prolonged hot weather and reduced generation capacity at power plants as contributors to the rise in household electricity bills. Increased use of high-capacity electrical appliances and reduced hydropower generation have led to greater reliance on imported liquefied natural gas, raising fuel procurement costs beyond projections.

Addressing the challenges faced by domestic consumers, Fadillah highlighted the government's commitment to mitigating the impact of rising electricity costs. Effective from September 1 to December 31, 2026, the government expanded electricity bill protection, exempting domestic consumers with monthly electricity usage of up to 800 kWh from the surcharge adjustment, Sales and Service Tax, and retail charges. This measure aims to support about eight million domestic consumers in Peninsular Malaysia, aligning with the Energy Commission's assurance to protect the majority of domestic consumers.

Additionally, consumers with monthly electricity consumption below 1,000 kWh can benefit from rebates under an energy efficiency incentive scheme, encouraging more efficient electricity usage. The new tariff structure supporting this initiative was implemented on July 1, 2025.