Tenaga Nasional Bhd is absorbing up to RM150 million in additional electricity costs after the government expanded bill protection for households, a move that has now prompted analysts to downgrade the utility.

The government raised the monthly electricity usage threshold for the Automatic Fuel Adjustment (AFA) surcharge exemption from 600kWh to 800kWh, bringing more than eight million domestic users, or up to 90% of TNB’s residential customer base, under the protection.

The exemption, which runs from September to December 31, also covers the RM10 monthly retail charge and 8% sales and service tax. 

TNB said it expects to absorb between RM120 million and RM150 million in AFA and retail charges during the period.

The expanded protection means households using between 600kWh and 800kWh a month will no longer face the additional charges under the AFA mechanism.

However, the relief comes at a cost to TNB.

TA Securities and UOB Kay Hian both downgraded TNB after the utility announced it would absorb the additional costs. The research houses expect the move to reduce TNB’s 2026 earnings by around 2% to 3%.

UOB Kay Hian said it was uncertain whether TNB’s decision would be a one-off, raising concerns over the future of the existing incentive-based regulation and cost pass-through framework.

CIMB Securities also estimated that the move could cost TNB up to RM150 million, while warning that investors could become concerned if the company is required to absorb further costs should fuel prices remain high beyond 2026.

For now, TNB’s commitment only covers the September-to-December period.

The company’s financial burden will also depend on AFA charges, which are linked to fuel costs. 

TNB has previously warned that prolonged geopolitical tensions and higher coal and gas prices could put further pressure on electricity generation costs.

So while millions of households will see protection from higher electricity charges, the latest move has shifted part of that cost onto the national utility and analysts are now watching whether this becomes a one-off measure or a longer-term burden for TNB.