Electricity theft and unfair Power Purchase Agreements drain revenue

Electricity theft is costing the national utility company, Tenaga National Bhd (TNB) nearly RM500 million annually. Over and above all this, TNB has already parted with an estimated RM78.3b of its revenue to Independent Power Producers (IPPs) over the last ten years.

Consumers’ Association of Penang (CAP), is concerned that eventually consumers will have to suffer from exorbitant tariff revisions, if no serious effort is made to curb electricity theft and amend the Power Purchase Agreements (PPAs).

It is believed that syndicates are helping consumers for a fee, by using various methods to obtain lower recording of electricity consumption.

60,705 cases of electricity theft had been identified between the fiscal years 2005 to 2010. Of this number, 43,343 cases have been either settled in court or out of court and losses recovered, while the rest are under investigation or in the process of being charged.

An estimated 3,655 civil cases were filed under Section 38(5) of the Electricity Act 1990,whereby tenants of premises had been sued for default of payment for electricity used.

Criminal charges have also been filed against 20 cases under Section 37(3) for dishonestly consuming electricity. Currently the maximum penalty for anyone convicted under this

As a result of unfair terms with IPPs, a large proportion of TNB’s revenues have been gobbled up by the IPPs. Under those sweet-heart deals TNB is required to buy electricity from IPPs at a price higher than its own generating cost. It has also got to pay for unused capacity. At one time the reserve margin of electricity was more than 50%. Currently it is around 40%, while 20% is all we need. TNB is also required to bear the risk of any fuel price hikes.

In the year 2005 the revenue loss was RM9.2b (54% of total revenue) and was projected to be RM19.6b (65%) by end of 2010.

All this does not bode well for the economy of the country and the consumers may eventually be forced to pay through their nose for all the indiscretions of the authorities.

CAP therefore calls on the government to urgently tackle the problem of electricity theft; act decisively and increase penalties. Life term should be considered for serious cases. At the same time the PPAs should be amended to be fair to all parties concerned. Until then a windfall tax should be levied on the super profits earned by the IPPs.