New bill to allow PLN to charge region-based electricity tariff

Alfian ,  The Jakarta Post ,  Jakarta   |  Thu, 06/18/2009 1:20 PM  |  Business

The government proposes to adopt a region-based electricity tariff that may mean customers in Java will end up paying higher rates than those in other areas.

The proposal is included in the electricity bill, which is currently being deliberated by the government and the House of Representatives, J. Purwono, director general for electricity and energy utilization at the Energy and Mineral Resources Ministry said Wednesday.

"Although all electricity distribution is controlled by *the state firm* PT PLN, the bill allows for the possibility of tariffs to be imposed by each region. So, electricity tariffs for Java and Bali may be different from other regions," Purwono said.

PLN is the sole distributor of electricity in the country.

Currently, electricity rates are based on the allocated power capacity per customer, customers with the same capacity from all regions pay the same tariff rate.

PLN's average electricity tariff is Rp 654 (6 US cents) per kilowatt hour (kWh), lower than Rp 962 per kWh, according to estimated production costs this year.

The government has allocated Rp 42.46 trillion to subsidize electricity this year, down from Rp 82.09 trillion in 2008. For 2010, the government and the House are still deliberating over funds between Rp 44.38 trillion and Rp 52.44 trillion to allocate for electricity subsidies.

Purwono said the region-based price would help reduce subsidy spending. "With the region-based system, the subsidy will mainly go to areas where electricity service is still inadequate," Purwono said.

He added that, under the regional system, the tariff will be made based on service quality and the purchasing power of the region.

"It is reasonable that people in regions with frequent blackouts pay lower tariffs than those of in the regions with better electricity services," Purwono said.

"With the system, tariffs in Java may be higher than other areas," he added.

Purwono said the proposal was still being discussed by the government and the House. He said the bill was expected to pass in the current legislative sitting period which will end on July 3.

Also proposed in the bill is the wider role of regional governments.

Purwono said that, through the bill, the government has proposed to give regional governments the authority to manage its own power projects.

Included in the bill is the authority of regional governments to determine tariffs and invite private business to build power projects in the regions. "The proposal is intended to help increase electricity services across the country."

Currently only 65 percent of the country has electricity.
 

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.