The consumption of electricity by an average
household in Malaysia is increasing as days gone by. As we know, the high
demanding rate of electricity in Malaysia which exceeded the supply has caused
several obligation in obtain electricity, which place a scenario of shortage.
The high demand of electricity is mainly due to increasing population; changes
in the price of complementary goods and also consumption of electricity by
certain electronic appliances. However, the supplying rate by the electricity
board could not meet the demand as to high resources price and lack of skills
personal.
The willingness and the capability
of purchasing in a certain quantity at a given price is what we call demand.
For example, we may be willing to consume an amount of electricity; however,
holding the form of willingness will not be effective, as we should hold the
capability to consume the electricity at the given selling price.
When price if not being the factor; there are
still many determinants that affect the demand. First of all, we could view a
linear increment in the population from the Malaysia Population Statistic,
which tends to be the factor of high demand for electricity (Sloman, Wride and Garratt, 2012).
However, the prediction of population is
expected to increase due to Malaysia’s aim of being a developed country in Year
2020 (Musa, 2011). Result to the development as shown in Figure 1.1, the population will
then increase the demand of electricity from Q0 to Q1, as
to fulfill the consumption by every individual, which then cause a right
shifting effect towards the demand curve from D0 to D1.
The next affecting factor would be the changes
in the price of complementary goods. The complementary goods towards the demand
of electricity would be goods such as television, air conditioner, refrigerator
and many others. As electronic appliances would play a demanding role in the
consumption of electricity. A recent news showing a declining price of LED
television which leads to popularity of 37% in the market, which could be the affecting
factor in the changes of complementary good’s prices that leads to the demand
of electricity (The Star, 2011). As the result of declining price of such good, it will then
increase the demand for electricity from Q0 to Q1, that
leads to a rightwards shift in the demand curve from D0 to D1 as shown in Figure 1.1.
Besides that, the consumption of electricity by
a certain electronic appliances would be one factor that affects the demand of
electricity (Tenaga Nasional Berhad, 2013a). In every electronic appliance these days, they are installed with functions
that permit the minimal usage of electricity. Such appliance would be the air
conditioner with energy saving mode. However, not all the appliances come with
the function due to the age of the appliances itself or the low advancement of
technology by the firm. Referring to Figure 1.1, when a certain electronic
appliances that consume high amount of electricity, it will then lead to an
increase in the demand of electricity from Q0 to Q1,
which creates a rightward shift of the demand curve from D0 to D1.
The producer’s willingness and the
capability to sell a certain quantity of goods at a given price bring the
meaning of supply (Sloman, Wride and Garratt, 2012). Supplier’s main purpose is to reach the aim of gaining
profit from the sales of goods where the willingness and capability of the
suppliers, totally depends on the future profit they are gaining from the
production of the goods.
As to the low supply rate of
electricity, if the price does not determine the quantity supplied, there are
factors that cause the change in supply. First of all, it would be the price of
the resources. In Malaysia, the main resources used to produce electricity
would be coal, and these resources are obtain 60% from Australia, 30% from
Indonesia, 5% from China and another 5% from South Africa, which clearly show
that Malaysia obtain 100% of the coal from an external source (Choong, 2012). Hence, a higher
price in the resources will then reduce the amount produced from Q0
to Q1 and leading to a leftward shift in the supply curve from S0
to S1 as shown in Figure 1.2.
The next factor that
leads to a low supply rate in electricity is that Malaysia has a lack in the
number of skilled personal (Tan, 2010). The technology advancement in Malaysia’s
electricity board has pay lots of attention on it. However, this technology
advancement is not being efficiently used as the number of skilled personal in
the industry is lacking. Holding on to a low rate of skilled personal will then
lead to a decrease in supply of electricity from Q0 to Q1,
which then lead to leftward shifting in the supply curve from D0 to
D1 referring to Figure 1.2.
Relating the above issue discussed
with the news article, we could clearly view the problem where the demand of
electricity has exceeded the supply rate, which then lead to a shortage in the
market (Muthiah, 2012). However, the shortage problem should be solve especially when the goods
are a form needs and urgency, as this will result in the dissatisfied consumer
and users.
One of the ways in solving the
scenario of shortage in electricity is that, a rise in the price of electricity
per kilowatt-hour should be implemented by the electricity board (McConnel et al, 2012). Under the
economics explanation, when price of electricity increase from P0 to
P1, it will then lead to a lower consumption of it which creates an
upward movement along the demand from Q1 to Q2 and supply
curve from Q0 to Q2, based on Figure 1.3. It is because a
higher price will cause the consumer to consume electricity in conservative way
and producer expecting a rise in selling price will then increase the supply of
the goods which then create a meet up at the equilibrium point A where no
shortage or surplus is occurring.
In another point of view, the
increasing price of electricity could be a bad effect towards the consumer.
However, being a necessity is totally opposite as they create an inelastic
demand where the responsiveness upon a change in price would not be affected
much (McConnel et al, 2012). As for electricity, when there is a rise in price, consumer will tend to
be conservative but not avoiding it at a full blow as electricity is totally
important in the continuation of their daily basis. Hence, results a small
change in the quantity of electricity from Q0 to Q1, when
price changes from P0 to P1, as referred to Figure 1.4.
The next solution to the shortage
is that, consideration should be given in order to replace the resources with
their alternatives such as nuclear energy (Muthiah, 2012). It is because in Malaysia, the
supply of coal is 100% obtain from external countries and by choosing other
alternatives, TNB would not base fully on coal to continue production. Hence,
by replacing the resources, the production of electricity will then increase
from Q0 to Q1, leading to a rightward shift in the supply
curve from S0 to S1 and also price falls from P0
to P1, which then cause a movement downward along the demand curve
as referred to Figure 1.5. With the shifting of supply curve, it creates a new
meet up point A where quantity supplied is sufficient.
Opponent view of nuclear energy has initially
created the dissatisfaction in the heart of citizen, where they fully determine
their safety upon the radioactive ray in the nuclear emission on the firm such
as Lynas. However, after detail plans and rule being amended, the citizen agrees
on the matter where nuclear waste is being exported out of the country for
their safety purposes (The Star, 2012)
Another solution that should be
taken consideration is that, employee should be given proper and detail
training on their job prospect especially in the maintenance and operation of
technological appliances. From example, TNB provides a premier technical
training called ILSAS of long and short term under the electronic field with
the aim of being the centre of excellence (Tenaga Nasional Berhad, 2013b). With such training and development
program, it will then boost up the firm production efficiency as the employee
has the knowledge related to their task. Referring to Figure 1.5, when employee
has the intelligence on their task, the supply curve will then shift rightwards
from S0 to S1 and a price fall from P0 to P1,
which then cause a movement downward along the demand curve. Hence, the shift
in supply curve then creates a new point A where supply is meeting the
requirement.
As a conclusion, electricity is one of the
necessities in our daily life, as the generation these days needs to generate
every single appliance with the help of electricity. Wastage of single
electricity is a certain prohibition, as every single voltage of electricity
supply enables us to perform our activities. Hence, with the intervention of non-governmental
organization (NGO) into the effective campaign which is able to create awareness
among electricity user such as Earth Hour, it will cause a reduction in
electricity consumption. Statistics had shown, that within the 1 hour of the
event, the average amount of 100 – 200 MW of electricity being conserved (Lai, 2013). Therefore,
we as a consumer should appreciate electricity, as an avoiding way to the
scenario where supply does not meet the demanded amount.
References
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