AFA Explained: Why Your TNB Bill Changes Monthly

What is the Automatic Fuel Adjustment (AFA)?

The Automatic Fuel Adjustment (AFA) is the line on your TNB bill that changes every month even though your base tariff is fixed. It is a monthly surcharge or rebate, in sen/kWh, that adjusts your electricity cost to reflect the actual price TNB paid for fuel — mainly coal and natural gas — and the movement of the ringgit against the US dollar. When global fuel is expensive, AFA adds a surcharge; when it's cheaper than the baseline, AFA gives you a rebate. It applies to every kWh a business consumes, which is why your bill moves month to month while the headline rate stays the same.

AFA was introduced under the RP4 tariff on 1 July 2025, replacing the old ICPT mechanism. Here is how it works, how much it has swung, and — the part that matters for an operator — what you can and can't do about it.

AFA vs ICPT: what actually changed

AFA replaced the Imbalance Cost Pass-Through (ICPT), and the core change is frequency. ICPT was reviewed and adjusted every six months; AFA is adjusted every month.

The practical effect:

- Faster pass-through. Your bill now reflects current fuel and currency movements within a month, instead of lagging by up to half a year.
- Smaller, more frequent steps. Rather than one large six-monthly correction, you see twelve smaller monthly adjustments — more volatility in any given month, but less of a shock when a review lands.
- More transparency. Fuel cost is now a separate, visible line, not buried in a periodic reconciliation.

For a business, this means electricity budgeting has become a monthly exercise. The number you pay per kWh genuinely changes every cycle.

How AFA is calculated

AFA compares the actual cost of fuel used to generate electricity against a base fuel cost built into the RP4 tariff. Under RP4, the base average tariff was set at 45.40 sen/kWh for the 2025–2027 period.

Two inputs drive the monthly figure:

1. Global fuel prices — primarily coal and liquefied natural gas, the fuels behind most of Peninsular Malaysia's generation.
2. The MYR/USD exchange rate — because that fuel is bought in US dollars, a weaker ringgit raises the cost even if the commodity price is flat.

If the actual fuel cost for the month comes in above the base, the difference is passed through as a surcharge (a positive AFA, added to your bill). If it comes in below the base, it's returned as a rebate (a negative AFA, reducing your bill). The mechanism is designed to move automatically within a set band each month, with adjustments beyond that band requiring government approval — a guardrail that protects consumers from an uncapped spike in a bad month.

How AFA fluctuates: the real numbers

The monthly figures since launch show just how much this line moves. The published AFA rates ran roughly like this:

- July 2025: 0.00 sen/kWh (the baseline starting point)
- August 2025: −1.45 sen/kWh (rebate)
- September 2025: −1.10 sen/kWh
- October 2025: −6.50 sen/kWh
- November 2025: −8.91 sen/kWh (a deep rebate as fuel costs fell)
- December 2025: −6.42 sen/kWh
- January 2026: −4.99 sen/kWh
- February 2026: −2.77 sen/kWh
- March 2026: −2.15 sen/kWh
- April 2026: −0.47 sen/kWh (the rebate nearly gone)
- May 2026: +1.38 sen/kWh — the first surcharge since launch
- June 2026: a gross surcharge of about +3.44 sen/kWh, of which roughly 2.59 sen/kWh is passed through to consumers after part of the cost was absorbed by the Kumpulan Wang Industri Elektrik (KWIE) fund

That is a swing of more than 12 sen/kWh in under a year — from a deep rebate of nearly 9 sen/kWh, to neutral, and over the line into a surcharge as global fuel prices firmed. And it is still moving: the official outlook for July to September 2026 projects a surcharge of roughly +4.89 to +7.08 sen/kWh under an emerging-conflict scenario, as oil and gas prices climb on geopolitical tension. The rebate that softened bills through 2025 has become a cost that is rising.

Put a number on it. For a site consuming a million kWh a month, every 1 sen/kWh of AFA is RM10,000 a month. The swing from November 2025's −8.91 sen/kWh rebate to a mid-2026 surcharge of +3 to +7 sen/kWh is a change of RM120,000 to RM160,000 a month on that same consumption — driven entirely by fuel markets, not by anything the site did. AFA is not a rounding error.

The lesson is that AFA is genuinely unpredictable month to month, because it tracks commodity markets, geopolitics and currency that no facility controls. The rebate era is not guaranteed to return, and the prudent assumption for budgeting is that AFA can swing hard in either direction.

Who pays AFA?

This is where business and household treatment differs:

- Domestic consumers using 600 kWh/month or less are exempt from AFA (and the retail charge) — they see no surcharge or rebate.
- Domestic consumers above 600 kWh/month pay AFA on their consumption.
- All commercial and industrial consumers pay AFA on every kWh, with no exemption.

So if you run a factory, a commercial building, or any non-domestic operation, AFA applies to your entire consumption, every month, without a free tier. It multiplies against every unit you use.

What AFA means for your business — and the one lever you have

Here's the uncomfortable truth: you cannot control AFA. You can't negotiate coal prices or the ringgit. The surcharge (or rebate) is the same per-kWh figure for every business on your tariff.

But that reframes the problem usefully. AFA is a multiplier on kWh — it's the rate, and your consumption is the quantity. You can't change the rate, but you control the quantity. Every kWh you don't use is a kWh that AFA — surcharge or not — never gets applied to. When AFA swings into surcharge territory, the businesses that feel it least are the ones that already cut their consumption.

That puts the focus back on the parts of the bill you can manage:

- Energy efficiency reduces the kWh that AFA multiplies against, and trims the base energy charge at the same time. This is the case for a proper energy management system.
- Maximum demand management attacks a different, large, controllable charge — the Capacity and Network charges billed on your monthly peak. We break that down in the maximum demand charge under RP4.
- Visibility lets you see consumption as it happens and act on it, rather than discovering the damage on a bill where the AFA rate has already moved against you.

A Smart Operation Platform like CobiNeural is built for exactly this. Its Billing & Tariffs module models the RP4 components — including AFA — so you can see how a given month's rate lands on your actual consumption and across tenants or cost centres. Its monitoring and anomaly detection cut the kWh that every rate, AFA included, is applied to. And the same data supports your EECA reporting obligations.

You can't stop AFA from fluctuating. You can make sure it's fluctuating against the smallest possible number of kWh. To see where your consumption is going and how the RP4 charges land on it, book a CobiNeural walkthrough.

Sources

- [Automatic Fuel Adjustment (AFA) — Single Buyer Malaysia](https://www.singlebuyer.com.my/Generation-Info-Tariff/automatic-fuel-adjustment-(afa))
- ICPT replaced with Automatic Fuel Adjustment — Business Today
- AFA rate updates — paultan.org