Note:
- ACP: Applicable Coal Price
- GCIN: globalCoal Newcastle
- Forecast as of 7 August 2026.
- Base case refers to emerging conflict, moderate case refers to escalating conflict, and high case refers to severe conflict.
What is AFA
AFA mechanism promotes more transparency, cost-reflective, cost-efficient and reduce the timing gap in fuel prices and foreign currency exchange.
When fuel price increase/decrease, AFA will reflect accordingly.
In summary, AFA mechanism helps to better manage the fuel price volatility.
Why AFA surcharge
As published by TNB in its website, AFA for September 2026 is recorded as a surcharge of RM 375 million (equivalent to 3.67 sen/kWh). The surcharge is mainly due to higher fuel prices, which resulted in increased generation costs during the period
Nevertheless, compared to the previous month, the AFA surcharge was lower by 14%, mainly attributable to the optimisation of coal and gas generation, coupled with lower generation from higher-cost fuels, particularly alternate fuel.
Note: Domestic customers with monthly consumption of 600 kWh and below will not be affected by AFA.
1.
Increase in fuel costs
In September 2026, fuel prices are higher than the baseline prices used in tariff setting, resulting in an overall increase in generation costs.
Coal
The coal price for September 2026 is recorded at 122.85 USD/MT (Base price: 97 USD/MT). Based on the exchange rate of 4.0944 RM/USD for September 2026, this translates to a coal price of 23.05 RM/mmBTU (Base price: 19.14 RM/mmBTU at 4.307 RM/USD).
Gas
The Tier 2 gas price for September 2026 is recorded higher than the Base price:
- Tier 1: 31.71 RM/mmBTU (Base price: 35 RM/mmBTU)
- Tier 2: 57.87 RM/mmBTU (Base price: 46 RM/mmBTU)
AFA Outlook
As published by TNB in its website, AFA outlook from October to December 2026 is projected to range from +2.81 sen/kWh to +5.48 sen/kWh. This projection is based on the Base Case (Emerging Conflict) scenario, which lower fuel prices are expected to contribute to reduction in generation costs during the period.
In the latest outlook, overall fuel prices are trending downward, reflecting stabilisation of the market.
Global Fuel Prices & Forex Trends insights
Coal
Forex Trending
Gas
What is Automatic Fuel Adjustment (AFA)?
AFA is a mechanism under the Incentive-Based Regulation (IBR) framework that allows for automatic monthly adjustments to reflect the variation (either rebate or surcharge) in the variable component of the Energy Charge, where it is subjected to the (i) movement in the global fuel prices (e.g. coal & gas) and (ii) movement in the foreign currency (e.g. USD to RM).
Why was AFA introduced?
AFA mechanism promotes more transparency, cost-reflective, cost-efficient and reduce the timing gap in fuel price and foreign currency exchange.
The monthly AFA helps to:
1. Reflects current fuel prices
AFA stays aligned with current market conditions
2. Improves transparency
Customers can see that the increase or decrease of AFA is tied to fuel price movements
How is AFA different from ICPT?
AFA reflect monthly adjustment to electricity tariff based on the fuel cost changes driven by movements in the global fuel prices and foreign exchange rate.
The difference between Imbalance Cost Pass-Through (ICPT) and AFA are tabulated as below:
How is AFA calculated?
AFA is calculated by comparing the actual fuel cost used in electricity generation against the base fuel cost set in the tariff. If actual costs are higher, a surcharge is applied; if lower, a rebate is given.
What is the base fuel price used in AFA?
Coal
97 USD/MT equivalent to 19.14 RM/mmBTU (based on exchange rate of 4.307 RM/USD)
Gas
- • Tier 1 (RMP for <800 mmscfd): 35 RM/mmBTU
- • Tier 2 (13% Brent for >800 mmscfd): 46 RM/mmBTU
What factors influence AFA?
AFA is influenced by movements of fuel prices and exchange rate, system conditions (i.e. generators availability, weather conditions which will affect hydro lake levels and solar generation), as well as geopolitical events.
For instance, when coal and gas prices increase above their base prices, the cost of generating electricity rises, which contributes to a higher AFA rate.
How do global market conditions impact AFA?
Global factors such as supply-demand conditions, currency movements, and geopolitical developments can influence fuel prices, which in turn affect AFA as illustrated further below: