REGULATORY STUCTURE AND MARKET MODEL IN MALAYSIA WITH THE IMPLEMENTATION OF INCENTIVE BASED REGULATIONS (IBR) AND NEW ENHANCED DISPATCH ARRANGEMENT (NEDA)

摘要

The Malaysian Electricity Supply Industry (MESI) is undergoing a transformation to ensure the efficiency of the whole electricity industry structure. The initiative is under the governance of the Energy Commission of Malaysia (EC). Among the initiatives are the implementation of Incentive Based Regulations (IBR), and the introduction of the Enhanced Dispatch Arrangement (NEDA) in MESI [1]. EC has introduced the concept of Incentive Based Regulations (IBR) in 2012 and Malaysia is embracing the reform of its regulated power business by implementing IBR starting from year 2014 as a trial year and 2015 to 2017 as the first regulatory period. This economic regulation will ensure that utility company i.e: Tenaga Nasional Berhad (TNB) operates efficiently with the aim to protect the customers as tariff charged to the customers are based on efficient costs. TNB must also be able to demonstrate quality in its services and performance whereby the company will get the right incentive to improve its performance and to increase investments for a reliable and sustainable electricity supply to Peninsular Malaysia. With the implementation of IBR customers will benefit where efficiency gain in the system will be passed on to the customers. Customers also will only pay the true cost of generating electricity via the implementation of Imbalanced Cost Pass Through (ICPT) mechanism under IBR. Besides that, EC initiated the implementation of New Enhanced Dispatch Arrangement (NEDA). It is an enhanced way of dispatching generators. With this new mechanism the industry will allow Independent Power Producer (IPP) to bid by lowering Variable Operating Rate (VOR) in the Power Purchase Agreement (PPA) or Service Level Agreement (SLA) with the cap of the VOR value stated in the PPA. The trial period for NEDA has been conducted by Single Buyer Department, TNB from 15th Sept 2014 to 14th Nov 2014 to evaluate market participants and the whole system readiness towards the idea of NEDA implementation. This paper will discuss in depth the elements in IBR and the characteristics of NEDA, the implementation plan and issues related to both initiatives.