Govt plans to introduce a new electricity pricing system

The government is planning to introduce a new electricity pricing system under which each area will have a different electricity rate subject to its economic ability, Koran Tempo newspaper reported in a front page story on Tuesday.

With this new plan, the electricity rates will not be the same throughout the country in the future.

Currently, the electricity rate is being calculated averagely on the basis of production cost.

The government has already asked the state electricity firm Perusahaan Listrik Negara (PLN) and the director general for electricity and energy utilizatation to recalculate the electricity charges in each area, Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

The average price for each area will include transmission and distributuion costs besides production.

?The data on the average costs is required to calculate the regional electricity prices,? said the minister.

Separately, director general for electricity and energy utilization at the ministry of energy and mineral resources Luluk Sumiarso said the regional electricity charges will increase or decrease subject to the operational and production costs after implementing the new system.

For example, the electricity rate will be higher in East Nusa Tenggara compared to Java.

With the usage of oil-based fuel in producing electricity, the electricity rate in East Nusa Tenggara will become more expensive i.e. Rp 1,800 per kilowatt-hour (kWh), where is in Java the rate will be cheap i.e.Rp 300 Kw with the hydro power project or geothermal power plant.

PLN is also hoping to increase the benchmark rate for its power from 7 U.S. cents per kilowatt-hour (kWh) at present to 8 cents in 2004. (*)