The Consumers' Association of Penang (CAP) is disappointed to note that Tenaga Nasional Bhd is continuing to push for an electricity tariff increase at a time when the government has come out against indiscriminate price hikes for goods and services.

TNB president and chief executive officer Khalib Mohd Noh on Tuesday confirmed that the company will submit a proposal to the government for a rate rise, after having previously laid the groundwork for this move by claiming increased power-generation costs. Given that TNB has just reported a handsome 32 percent jump in its fourth-quarter net profit to RM446.4 million and a full-year net profit of RM813.7 million, the call for a tariff hike is rather difficult to stomach.

As TNB is not exactly going to join the ranks of the paupers anytime soon, and as higher electricity prices will certainly do no good to the consumer's lot, we wonder what the motivation behind this rate-increase proposal is. It is understood that investors are unhappy with the present standstill in power tariffs, which have remained at 1998 levels.

This begs the question of the extent to which our national power producer in proposing a rate hike, is responsive to the interests of fund managers and other stockmarket players instead of the public well-being. Could this in turn be due to the fact that a privatised TNB has now become beholden to the dictates of investors interested only in the corporate bottomline?

In any case, TNB's privatisation had been justified in the first place on the grounds that it would increase operating efficiency and keep power prices low. CAP hopes that these grounds will not be undermined. In this regard, there is certainly room for improvement in efficiency that can obviate the need for a rate hike, as recently pointed out by Energy Commission chairman Dr Mohd Annas Mohd Nor.

Among other measures, TNB could consider cutting down on its reserve margin, which has been reported to be as high as 45 percent. If this figure is correct, then it indicates an excess supply of 45 percent for every unit of power generated. This is unnecessarily high - a reserve margin of 25 percent or less will suffice - and only adds to TNB's generation costs.

Moreover, if TNB is really worried about rising costs, it would do well to call for a review not of electricity tariffs but of the rates at which it purchases power from independent power producers (IPPs). A staggering 40 percent of TNB's costs currently go to the IPPs, which consistently pocket ample profits even as beleaguered consumers are now faced with the call for a tariff hike.

In short, CAP hopes that TNB will live up to its tagline of 'powering the nation's progress' rather than resort to the regressive step of burdening the nation's people at every opportunity.

The writer is the president of the Consumers Association of Penang.