Time-of-Use, Green Tariffs and Avoidable Penalties

Parts 3 and 4 of this course looked at two big lines on your electricity bill: the fuel surcharge (AFA) and maximum demand (MD). Both are largely about how much and when you consume. This part is different. Here we pull on the rate itself — the price attached to each unit and each kilowatt — without necessarily using a single kilowatt-hour less.

There are three levers a facility manager can reach for. Shift load into cheaper hours. Buy green power at a known premium. And — the quietest win of all — stop the penalty charges that leak money for no benefit whatsoever. The time of use tariff, power factor penalty and a couple of lesser-known surcharges are all sitting on your bill right now, waiting to be managed.

Lever 1: Time of Use — the same energy, a cheaper clock

Under a Time of Use (ToU) tariff, a kilowatt-hour is not one price. It is two, depending on when you draw it. Since 1 July 2025 the windows are:

- Peak: 2 PM to 10 PM on working days — the expensive block.
- Off-peak: 10 PM to 2 PM — the cheaper block, covering the whole overnight and morning stretch.
- Weekends and public holidays: fully off-peak, all 24 hours.

Two consequences matter for money. First, energy shifted out of that 2 PM–10 PM window is billed at the lower off-peak rate. Second — and this is the part most people miss — maximum demand is only charged during peak hours. Recall from Part 4 that MD is your single highest half-hour average, priced at the RP4 rate of roughly RM89.27–97.06 per kW. Under ToU, a demand spike that lands at 11 PM, or any time on a Saturday, does not count toward your MD charge at all.

So the strategy is concrete: move the heavy, interruptible loads out of the peak window. A cold room can pull its hardest overnight. Battery or ice storage can charge off-peak and discharge during peak. A workshop running a genuinely flexible batch process can start it after 10 PM.

Worked example. A factory runs a 200 kW chiller-plus-pumping load for 4 hours. If those hours sit inside the peak window at, say, 52 sen/kWh:

$$\text{Peak cost} = 200 \text{ kW} \times 4 \text{ h} \times \text{RM}0.52 = \text{RM}416$$

Run the identical load off-peak at 32 sen/kWh instead:

$$\text{Off-peak cost} = 200 \text{ kW} \times 4 \text{ h} \times \text{RM}0.32 = \text{RM}256$$

That is RM160 saved per run on energy alone, for the exact same work — before you count the demand charge you also dodged by keeping that 200 kW spike out of the peak window. Repeat it 22 working days a month and you are past RM3,500 without touching a light switch.

The catch is honest: ToU only helps if you have flexible load. A hospital or a 24/7 data hall with a flat profile has little to shift. Before you elect ToU, look at your interval data (this is exactly what a proper meter gives you — see how electricity meters work) and check that a meaningful slice of your consumption is genuinely moveable.

Lever 2: The Green Electricity Tariff — clean power without a rooftop

Plenty of Malaysian building owners want a credible renewable-energy claim but cannot fit solar on the roof — leased premises, shaded sites, strata title. The Green Electricity Tariff (GET) is the answer. You keep your normal TNB supply and pay a premium on top of the standard tariff, and in return your units are matched to renewable generation.

The premium has come down sharply and now sits as low as 3–5 sen/kWh (5 sen for a one-year commitment, 4 sen for two years, 3 sen for three). The economics get interesting because of two exemptions: green units are exempt from AFA (the fuel surcharge from Part 3) and from the 1.6% RE Fund levy. In a month when fuel costs spike, the AFA you avoid can outweigh the green premium you pay.

That gives a clean decision rule:

> Rule of thumb: GET beats the normal tariff whenever AFA is above roughly 3 sen/kWh.

Worked example. Take 100,000 kWh in a month where AFA is running at 5 sen/kWh and the green premium is 3.5 sen/kWh.

$$\text{AFA avoided} = 100{,}000 \times \text{RM}0.05 = \text{RM}5{,}000$$

$$\text{Green premium paid} = 100{,}000 \times \text{RM}0.035 = \text{RM}3{,}500$$

You come out RM1,500 ahead and pick up a renewable-energy certificate for your sustainability report at the same time. When AFA later falls back below ~3 sen/kWh, the maths flips and standard tariff is cheaper — which is why GET is a lever to watch month by month, not a set-and-forget switch.

Lever 3: Stop the leaks — penalties that buy you nothing

Load-shifting and green power are optimisations. The next three items are pure waste: money you hand over for no service in return.

The power-factor surcharge

Power factor (PF) measures how much of the current your site draws actually does useful work. Motors, chillers and fluorescent gear pull extra "reactive" current that jiggles back and forth without turning into output — the full story is in our Electricity Fundamentals lessons on reactive power. A low PF forces TNB to size cables and transformers for current you are not usefully consuming, so they charge for it.

For supply below 132 kV, the rule is simple: keep PF at 0.85 or above. Fall below and you pay 1.5% of your total bill for every 0.01 below 0.85:

$$\text{Surcharge} = 1.5\% \times \text{Bill} \times \frac{0.85 - \text{PF}}{0.01}$$

Worked example. A RM5,000 bill at a power factor of 0.80 is five steps of 0.01 below the threshold:

$$\text{Surcharge} = 0.015 \times \text{RM}5{,}000 \times \frac{0.85 - 0.80}{0.01} = 0.015 \times \text{RM}5{,}000 \times 5 = \text{RM}375$$

RM375 a month, every month, for nothing. (Drop below 0.75 and the rate jumps to 3% per 0.01, so the deeper the sag, the faster it bites.) The fix is a capacitor bank — a well-understood piece of switchgear that supplies the reactive current locally so it never travels down your meter. See our guide to power-factor correction with capacitor banks for how they are sized.

The investment case is usually easy. Suppose a capacitor bank to lift PF from 0.80 to 0.95 costs RM9,000 installed and wipes out that RM375 monthly surcharge — RM4,500 a year:

$$\text{Payback} = \frac{\text{Capex}}{\text{Annual saving}} = \frac{\text{RM}9{,}000}{\text{RM}4{,}500/\text{yr}} = 2.0 \text{ years}$$

A two-year payback on a device that then runs for a decade is one of the cleanest returns in building services.

The Connected Load Charge (CLC)

When you sign up for supply you declare a maximum demand — the ceiling you expect to draw. TNB then sets a Reference Maximum Demand, which in the early years is about 85% of your declared figure. If your actual recorded MD in a month falls below that reference, you pay a Connected Load Charge of RM8.50 per kW on the shortfall — a penalty for reserving capacity the grid then plants up for you but you never use.

Say you declared 500 kW. In year one your reference is 85% of that, or 425 kW. If your true peak never exceeds 350 kW, you fall 75 kW short of the reference:

$$\text{CLC} = (425 - 350) \text{ kW} \times \text{RM}8.50 = \text{RM}637.50 \text{ per month}$$

Note the charge bites on the gap below the reference, not the full over-declaration — but over-declaring is still money for nothing. Right-sizing your declared demand against what your meter actually records is free money. Our maximum demand calculator helps you find your real peak before you commit to a number.

The RE Fund levy (KWTBB)

Finally, most non-domestic bills carry the KWTBB levy — Malaysia's Renewable Energy (RE) Fund — a 1.6% charge on your electricity bill that seeds national renewable projects. Unlike the items above, this one is not a mistake to fix; it is policy. Two things are worth knowing. First, GET units (Lever 2) are exempt from it. Second, the domestic exemptions are generous: a household using 600 kWh or less a month has its AFA waived, and 300 kWh or less waives the RE Fund levy entirely. Those thresholds matter for staff quarters, hostels or any residential sub-account on your site — check whether they are being billed correctly rather than lumped into a commercial rate.

Putting the three levers together

None of these levers reduces the work your building does. They change the price attached to that work:

- ToU re-prices energy by moving it to a cheaper clock and keeps demand spikes out of the charged window.
- GET buys a defined renewable premium that often wins outright in high-fuel months.
- Penalty hygiene — power factor, connected load, and correctly classified accounts — plugs leaks that return nothing.

The first two need judgement and interval data. The third is close to a free audit: pull last month's bill, find the power-factor line, the connected-load line and the levies, and ask whether each is as low as it can be. If you have visibility across many meters, this is exactly the kind of always-on tariff and penalty tracking that a monitoring layer like CobiNeural is built to surface — a surcharge you can see is a surcharge you can kill.

The takeaway

You do not have to use less energy to pay less for it. Shift flexible load out of the 2 PM–10 PM peak, treat GET as a monthly decision against the AFA, and hunt down the power-factor, connected-load and mis-classified-account penalties that quietly drain the bill. Between them these levers routinely find thousands of ringgit a month that consumption cuts never touch.

Next, Part 6: The Cost of Fuel and Thermal Energy leaves the electricity meter behind and follows the economics of the gas, steam and heat your building burns.