GUERNSEY assisted in the preparation and presentation of a comprehensive pricing study for Tenaga Nasional Berhad (TNB) responding to an emerging peninsular Malaysian restructuring electricity market. TNB, the largest utility company and the only fully integrated electric utility in peninsular Malaysia, had undergone recent privatization but it was still owned almost 75% by the government of Malaysia. GUERNSEY’s tasks included:
- Examining the nature of the current utility pricing policy
- Review of economic, commercial and social pricing objectives
- Development of analysis
- Recommending the cost of capital and revenue requirements for TNB
- Development of the cost of supply using marginal costing and average embedded costing methodology
- Development of re-balance and restructured tariffs
- Training and transfer of technology from GUERNSEY to TNB staff
- Assisting TNB in developing communication strategy
- Filing requirements to secure approval of the data filing from the regulators, the various ministries and consumer groups
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Because of the extreme financial urgency of receiving timely price relief, the entire process needed to be done in an extraordinarily short time. GUERNSEY quickly completed the analysis and recommendation portion of its role, and continued to assist TNB in obtaining necessary approvals from Malaysian decision makers. Our analysis included review of the Malaysian regulatory system and its compliance with the transparency goals. Additionally, GUERNSEY evaluated restructuring in the Malaysian markets, and provided advice on the best strategy for TNB to flourish in the emerging Malaysian power market.
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