Govt mulls to introduce new electricity price mechanism

The government is considering to introduce a new electricity tariff mechanism called automatic tariff adjustment mechanism (ATAM) due to frequent fluctuations in the oil prices, rupiah’s exchange rate and inflation, the Bisnis Indonesia newspaper reported in Wednesday edition.

Director-General for energy utilization Yogo Pratomo said that the electricity tariffs will be automatically adjusted if there will be changes in the above three items.

“We will examine this issue until the end of the year. With the implementation of ATAM, the rise and fall of of electricity charges will depend upon oil prices, rupiah’s exchange rate and inflation,” Yogo said after awarding Indonesia’s National Standard (SNI) certificates to three producers of electricity equipment in Jakarta on Tuesday.

In the ATAM mechanism, the government will fix a range of electricity prices so that the charges will automatically either increase or decrease due to the changes in the three factors.

However, he didn’t say when the government will implement this new system.

State electricity company PT Perusahaan Listrik Negara (PLN) is also mulling to offer a new system called hedging of power charges to export-oriented companies so that the difference in exchange rate, which is above power rate, can be reduced.

PLN president director Eddie Widiono Suwondho said his company has already offered the option to several export-oriented companies. However, he did not mention neither names of the companies nor which industry they belong to.

“We have already talked to several companies regarding hedging of tariffs concept, but it was only in the form of suggestion. If they want to choose particular option, they are most welcome, Eddie told the Bisnis over the weekend in Jakarta.

According to Eddie, PLN will offer the tariffs in rupiah and the U.S. dollar. So the companies can choose either or rupiah or dollar tariffs. (*)