Micromanaging energy

When AddAudio Malaysia in Petaling Jaya was dubbed as the coldest office in the country, no one would have expected that the office’s perceived temperature is found to be 10.92’C[1]. As the lingo goes “Cold-cold for what? You tak payah buy jacket one if you switch off the air-cond”, Malaysians are quick to complain about electricity bill hike but ironically we take energy for granted. Who is to blame here? The profiteering Tenaga Nasional Berhad (TNB), or our poor energy management?

                TNB is the sole electricity provider in peninsular Malaysia[2]. Being a regulated natural monopoly[3], one could easily assume that TNB has the power to overcharge their consumers. The perception is then strengthened with the fact that TNB has been consistently profiting for billions of Ringgit. Pressures to liberalise the utility market are becoming ubiquitous with politicians citing success stories of other countries’ market reform in Dewan Rakyat and public forums.

                But is market reform necessary? According to Prof Dr Ken Koyama, chief economist and managing director of Institute of Energy Economics Japan, there are no obvious positive effects that can be seen in terms of tariff rate reduction in fully liberalized utility market in Europe and in the United States of America[4]. Consumers in those regions can switch their electricity retailer, but the market competition is not able to drive the rates down. In fact, utilities are having difficulties in securing investments and achieving adequate energy mix[5].

                Macromanaging utilities have been a ‘social experiment’ since humanity learns to enact laws and lives in cities. Water in the UK, for example, has been reformed from complete privatisations to build-operate-transfer arrangements, to private management contracts, to incentive systems to state-owned monopolies. Regardless, regulating a natural monopoly is one of the best options to create a win-win formula for both the provider and consumers. With the Malaysia’s Incentive-Based Regulation (IBR) policy framework, TNB is able to obtain a fair rate of return (which could be translated to government income through tax measures), motivation to improve its efficiency and performance, and most importantly for us to pay a transparent and reasonable electricity rates.

                Unfortunately, electricity tariff is subjected to volatile fuel prices environment. One thing is for sure – fuel is finite and its price is increasing as supply is becoming scarce. The public need to understand that the government cannot afford to subsidise our basic needs forever. Effective macromanagement of utility will reach a point whereby a collective micromanagement of individuals are required to offset the ever-increasing challenge of electricity supply. If we feel that the price of vegetables is expensive in pasar malam, then surely ‘tanam kangkung’ is the best possible solution.

                ‘Tanam kangkung’ in this sense is to be self-sufficient. High electricity tariff should be an incentive to go green and be energy efficient as possible. The government has introduced mechanisms to mitigate our over-reliance to fossil fuels such as large scale solar (LSS) projects, net energy metering (NEM), minimum energy performance standards (MEPS) equipment and building energy audit. In the near future, advanced metering infrastructure (AMI) will arrive on our shore too[6]. Renewable energy (RE) measures such as private solar panel installation might be expensive to most of us i.e. the B40 and the M40, hence being energy efficient is the way to go to micromanage our energy consumption.

                Education is the key. With the advent of big data advancements, it is about high time that the public need to appreciate the nation’s energy delivery system. Fossil fuels will be our main energy source for many years to come – for depending too many RE sources feeding into the grid will cause imbalances and ultimately jeopardizing our energy supply security[7]. Simple efforts such as domestic time-of-use (ToU) implementation, passive energy building construction, and using 5-star rated MEPS equipment e.g. LED lights will go a long way if done correctly and collectively nationwide.

     Being efficient in micromanaging our energy needs isn’t just about reducing our bill payment, it is about playing a part to make the world a better place to live. It is about self-reliant in sharing our kangkung to our neighbours.

[My article is previewed in the Bangi Management Review (BMR). Click the BMR magazine above to read other articles]

// ps: Do read my article in the BMR magazine with caution. The BMR editor had edited it badly that some of the points might be misleading. Saya tak boleh salahkan editor majalah ini juga kerana mungkin mereka bukan orang yang ahli dalam industri tenaga negara. Among the errors created by the BMR editorial team are;

1. The entire article should be read with 'micromanaging energy' title and theme in mind, not on 'ways to mitigate high energy prices'.
2. In the second para., the editor replaced the word 'cantankerous' instead of the original word 'ubiquitous' - thus implying that the liberalisation of energy is a hot debate around the world. It is wrong and it is not the reality. The pressures to reform energy market has been a harmonious and natural process and is a normal scenario all around us - this is the gist that I am trying to convey.
3. In the fourth para., the editor had edited the original conjunctions to show that water utility in the UK is a collective of management models. It is not true. My original sentence is constructed in a way to show the processes of management model reform from one point to another.
4. Also in the fourth para., the editor edited IBR as incentive-based regulatory, which is false. The IBR (abbreviation is removed from the article) is a specific policy in Malaysia of which it should be read as 'Incentive-Based Regulation'. You can read more about IBR in the Suruhanjaya Tenaga website or in many articles in newspapers.
5. In the sixth para., the editor had removed the abbreviations of all of Malaysia's energy policy. To avoid confusion, the specifics are as follows - large scale solar (LSS), net energy metering (NEM), and minimum energy performance standards (MEPS) equipment. You can find information about these LSS, NEM, and MEPS easily on the internet.
6. Footnotes aren't included in the article. So, if you are wondering about anything mentioned in the article, written below is the clarifications of the footnotes.

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Footnotes:

[1] ‘We tried to find the coldest office in the Klang Valley. And you won’t believe the temperature we recorded’ – a social experiment featured on April 10^th 2017 in cilisos.my

[2] In regulatory terms, TNB is a public installation licensee for peninsular Malaysia. Sabah has SESB while Sarawak is operated independently by SEB.

[3] A natural monopoly is a type of monopoly that exists as a result of high fixed costs or startup costs of operating a business in a specific industry. Government vis a vis Suruhanjaya Tenaga, regulated the monopoly i.e. TNB to ensure the protection of public interest and sustainable competitive market environment.

[4] ‘Industry and Market Responses to Electricity Market Reforms’ public lecture in Suruhanjaya Tenaga, May 26^th 2017 by Prof Dr Ken Koyama.

[5] Energy mix is a combination of different energy sources to meet the demand of electricity. As of December 2017, Malaysia’s Grid System Operator recorded coal, gas, co-generator, and hydro contributions at 57.23%, 38.7%, 0.36% and 3.71%, respectively.

[6] AMI is an infrastructure of smart digital meter and wireless network to enhance electricity billing and improve demand-side management (DSM) of energy generation. Through AMI, consumers are able to micromanage energy consumption at home via recorded meter data reports. A pilot project of AMI has been successfully done in Melaka involving 1000 households and a selective nationwide rollout is expected in 2018.

[7] RE sources such as solar, wind, tidal and hydro are dependent on the Sun effects on the world climate. Intermittent availability disrupts the frequency of our national grid which could lead to national blackout if RE sources are not managed harmoniously.