Govt issues geothermal power rates regulation

The government has issued a ministerial decree on rates for electricity produced from geothermal power plants, an official says.

Director for the Management of Geothermal Power at the Energy and Mineral Resources Ministry, Sugiharto Harsoprayitno, told The Jakarta Post on Monday? the government issued the ministerial decree this month as a guideline to determine prices in geothermal projects.

Under the decree, for geothermal projects with a capacity above 55 megawatts (MW), the price of electricity per kilowatt-hour (kWh) is set at 80 percent of the total production cost of electricity in the region where the power plants exists.

For projects between 10 MW and 55 MW, the electricity is priced at 85 percent of the total cost for the electricity production.

The decree also says geothermal power plants with lower capacity (less than 10 MW) will have their rates set at between 60 and 80 percent of the local production.

Sugiharto paid the prices set in the decree had been negotiated with state-owned power firm PT PLN. He hoped the issuance of the regulation would improve investment in the geothermal sector.

Previously, PLN set electricity rates from geothermal power plants at about 5 US cents per kWh on average. Producers wanted 7 US cents per kWh.

With the new regulation, the electricity rate from geothermal power plants could reach 8.8 to 9.3 US cents per kWh in Java, where production costs reach 11.9 US cents per kwh. (*)