base coal price of USD 79/MT set for Regulatory Period 3 (RP3). While coal prices were not as high as 2022, it still posed a challenge to the system’s financial stability as generation costs make up 65% of the electricity costs in the tariff. TNB’s cash flow continued to be pressured due to the high payment obligations to ensure security of supply to customers. Nevertheless, the industry was able to navigate these headwinds with the implementation of the Imbalance Cost Pass-Through (ICPT) mechanism that reflected the government’s response to fluctuating global fuel prices and its commitment to energy sustainability. The ICPT mechanism, under the Incentive Based Regulation (IBR) framework, reflects changes in fuel and generation-related costs in the electricity tariff, aiming to manage these fluctuations effectively. With the priceof coal tracking downwards as the year progressed, adjustments were made to the ICPT mechanism to minimise the ICPT surcharge’s impact on consumers while encouraging energy efficiency and the adoption of renewable energy (RE) sources to control electricity costs. 2023 Adjustments In 2023, the government allocated a total electricity subsidy of approximately RM16 billion to mitigate the impact of fuel price volatility on electricity tariffs. This subsidy aimed to ensure that most consumers, especially domestic and non-domestic low-voltage users, would not be adversely affected by tariff adjustments, despite the high average price of coal exceeding the RP3 projected fuel cost. For the period 1 January 2023 until 30 June 2023, the tariff rate was maintained for domestic, Micro, Small and Medium Enterprises (MSMEs), and all Agricultural customers. There was also a surcharge of 20 sen/kWh applied to other Non-Domestic customers. For the period 1 July 2023 until 31 December 2023, the government rolled out a targeted subsidy scheme where MSMEs, specific agricultural sectors, and a new category of water and sanitation operators enjoyed maintained or reduced surcharges. For domestic consumers,