If your electricity bill crept up again this month, you are not imagining it. The Automatic Fuel Adjustment rate for July 2026 has been set at plus 3.59 sen per kWh, up from plus 2.59 sen in June, the second consecutive monthly increase. That might sound like a small number, but it is a surcharge added on top of your existing generation, capacity, network and retail charges.
The AFA mechanism replaced the older Imbalance Cost Pass-Through system back in July 2025, moving Malaysia from six-monthly tariff resets to monthly ones tied directly to real fuel prices and the exchange rate. In theory, this makes billing more transparent and more responsive, since you are paying closer to the actual cost of generation rather than a lagging average. In practice, it also means your bill can swing up or down every single month depending on global energy markets, something Malaysians never had to think about under the old system.
According to Energy Commission data, the increase comes down to coal. July's coal price sits at 122.37 USD per metric tonne against a base price of 97 USD, largely because two coal plants are running alongside historically low water levels at hydro dams like Temenggor and Kenyir, pushing generation costs up roughly 11 percent. A stronger ringgit is softening some of that blow. At an exchange rate of 3.9455 to the US dollar, compared to a base rate of 4.307, the effective cost of that coal in ringgit terms is not as painful as it would otherwise be.
There is some relief built into the system. Domestic users consuming 600 kWh or below a month are exempt from AFA charges entirely, and there is a separate Energy Efficiency Incentive for households under 1,000 kWh. If your household regularly runs above that threshold, particularly with heavy aircon use, this is the part of your bill worth actually reading rather than skimming past.
The bigger picture worth understanding is that this volatility is not a temporary glitch, it is how the system is designed to work now. Coal and gas prices will keep moving, and so will your bill, month to month, for the foreseeable future. It has not always moved in one direction either. Late last year, rebates as large as minus 8.91 sen per kWh were passed straight through to consumers when fuel costs eased, so the same mechanism that is squeezing bills this July has also worked in households' favour before. The practical takeaway is to actually check the AFA line on your bill each month rather than assuming it is a fixed charge, since it is now one of the more genuinely variable parts of what you owe TNB.
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