The Energy Commission’s Automatic Fuel Adjustment (AFA) rate for October 2026 is set at +3.61 sen per kWh, a slight decrease from September’s +3.67 sen/kWh. This marks the sixth consecutive month of positive AFA rates, with the computed rate exceeding the automatic band for five months.
According to Single Buyer, the AFA for October totals a RM391 million surcharge, up from RM375 million in September. However, due to higher electricity demand, the per-kWh rate is slightly lower. The computed AFA has consistently exceeded the automatic band, reaching 3.44 sen in June, 5.55 sen in July, 4.28 sen in August, 3.67 sen in September, and 3.61 sen in October. When this occurs, the Energy Commission refers the matter to the government, which decides how much of the cost is passed to consumers.
Sixth Consecutive Month of Positive AFA
Domestic users consuming 800 kWh or less per month are exempt from AFA, the retail charge, and SST until December 31, 2026. The three-month outlook shows an upward trend: +4.27 sen/kWh for November, +4.46 sen/kWh for December, and +7.59 sen/kWh for January 2027. November’s projection has been revised up from +2.81 sen/kWh, while December’s has come down from +5.48 sen/kWh. If the January projection holds, it would be the highest AFA surcharge since the mechanism’s introduction in July 2025.
The AFA is a component of electricity bills, replacing the previous Imbalance Cost Pass-Through (ICPT). It is automatically calculated as a surcharge or discount of up to 3 sen/kWh based on fuel prices, revised monthly. Larger changes beyond 3 sen require cabinet approval.
Fuel Prices and Tariff Components
Fuel prices rose in October, with Tier 2 gas increasing to 58.92 RM/mmBTU from 57.87 RM/mmBTU in September. Tier 1 gas climbed to 32.68 RM/mmBTU from 31.71 RM/mmBTU. Coal prices also edged up slightly to 123.76 USD/MT from 122.85 USD/MT, with the ringgit firming to 4.0834 RM/USD from 4.0944 RM/USD. In ringgit terms, coal stood at 23.16 RM/mmBTU, compared to a base price of 19.14 RM/mmBTU.
The AFA is one of five components used to calculate electricity bills, alongside the generation charge, capacity charge, network charge, and retail charge. For users consuming over 1,500 kWh monthly, the total charge is 54.43 sen/kWh plus the retail charge and AFA rate. For those using less than 1,500 kWh, the charge is 44.43 sen/kWh plus the retail charge and AFA rate.
To avoid paying AFA, consumers can either reduce their electricity usage below the 800 kWh threshold (reverting to 600 kWh in January 2027) or opt for the Green Energy Tariff (GET), which exempts them from AFA and the renewable energy fund levy. However, GET costs 5 sen/kWh for a 1-year subscription, 4 sen/kWh for 2 years, and 3 sen/kWh for 3 years, making it economically viable only if AFA exceeds these costs over the subscription period.
Understanding the AFA Mechanism
The AFA, introduced in July 2025, is one of five components in electricity bill calculations. The generation charge is 27.03 sen/kWh for consumption up to 1,500 kWh and 37.03 sen/kWh for higher usage, covering the cost of generating electricity. The capacity charge is 4.55 sen/kWh, and the network charge is 12.85 sen/kWh, covering grid maintenance and operation.
Consumer Options and Incentives
Domestic consumers using less than 1,000 kWh monthly can benefit from the Energy Efficiency Incentive, offering a discount relative to consumption. Domestic users with smart meters can opt for the Time of Use (ToU) scheme, which allows them to shift electricity usage to off-peak hours (10 PM to 2 PM on weekdays and 24 hours on weekends) at a lower tariff of 24.43 sen/kWh for up to 1,500 kWh and 34.43 sen/kWh above that.
