Under the IBR framework, the electricity in Peninsular Malaysia is made up of two main components, namely the base tariff and Automatic Fuel Adjustment (AFA) mechanism.

Base Tariff

The base tariff reflects the efficient cost of supplying electricity. It covers:

• Capital expenditure (CAPEX) and operating expenditure (OPEX) for  transmission, distribution, Grid System Operation (GSO), Single Buyer (SB) dan Customer Service (Retail)
• A fair return on the regulated asset base of transmission, distribution, SO, SB and Retail

Power purchase cost charged by generators (including the base fuel price) to the SB

Automatic Fuel Adjustment (AFA)

The AFA allows monthly generation charge adjustment to reflect variations in:

• Fuel prices
• Cost under Power Purchase Agreements (PPAs) and Service Level Agreements (SLAs), and
• Renewable Energy displaced costs and other generation costs