PUTRAJAYA, Feb 11 — The federal government today announced power tariff cuts averaging between three and five per cent effective March 1 this year, amid significant savings by Tenaga Nasional Berhad due to the sharp drop in fuel prices, Datuk Seri Maximus J. Ongkili said today.

The energy, green technology and water minister said the tariff would be cut by 2.25 sen or 5.8 per cent for Peninsula Malaysia based on an average of five categories of volume of usage.

Power rates will go down by an average of 1.20 sen or 3.5 per cent in Sabah and the Federal Territory of Labuan.

The new rates will mean consumers in the peninsula will end up paying around 36.28 sen per kilowatt-hour (kWh) once in effect, while users in Sabah and Labuan can expect to pay about 33.32 sen per kWh.

Maximus said the national energy company managed to save a total of RM726.99 million from lower fuel costs — apart from higher efficiency in coal- and gas-based energy production — allowing lower tariffs for consumers.

Sarawak, meanwhile, will not reduce its power rates as the industry there does not fall under the ministry’s jurisdiction, he added.

Maximus noted that the new tariffs would not affect consumers in Peninsula Malaysia who use 300 kWh or less each month, as the government has maintained low tariffs within that consumption rate for over two decades now.

Consumers currently pay 21.8 sen per kWh for the lifeline band, which refers to the first 200 kWh of usage — a rate that has been in place since 1997 — while the cost for power usage from 201 to 300 kWh has been set at 33.4 sen per kWh since 2009.

Putrajaya is also paying for the electricity use of some one million domestic consumers who rack up bills amounting to RM20 or less, using RM150 million in annual subsidies spread out over low-income households nationwide, the minister said.

The federal government will also have to maintain some RM260 million in annual subsidies for TNB subsidiary Sabah Electricity Sdn Bhd, due to the low revenue collection by the latter company that does not adequately cover its operating costs.

“Apart from fuel subsidies, the government has approved some RM2.3 billion in allocations in the form of grants to develop 81 electricity infrastructure projects in Sabah between 2015 and 2020.

“This includes projects to cut back on SAIDI,” he said, referring to the state’s System Average Interruption Duration Index, which tracks the frequency of power disruptions.

Recently, the Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM) said TNB could well afford to slash electricity rates, having saved millions of ringgit in fuel costs following the sharp drop in global crude oil prices.

The trade group said lower tariffs would bring down the price of goods and services due to lower production costs, and the savings could be passed on to consumers.