Gov, House agree on 15% tariff increase

The government and the House of Representatives have agreed to cap electricity subsidy for next year at Rp78.63 trillion, a move that warrants a 15 percent increase in power tariffs for consumers.

The agreement was reached during a hearing at the House?s Commission VII overseeing energy affairs on Monday. ?The increased tariff will not be applied to 450 volt-ampere (VA) and 900 VA customer groups,? said Sutan Bhatoegana, the Commission Chairman

Minister of Energy and Mineral Resources Jero Wacik said that the tariff increase was necessary for state owned utility firm PT Perusahaan Listrik Negara (PLN) to expand services. There are around 31 million new customers in 2013 that will require new power connections, Wacik said quoted indonesiafinancetoday.com

Production cost in electricity generation for 2013 is estimated to reach Rp 1,163 per kilowatt hour (kWh), from Rp 1,152 per kWh currently. The higher production cost is due to macro assumption factors such as rupiah exchange rate, assumption in Indonesia Crude Price (ICP), gas, coal, and oil fuel costs. (*)