New ruling to lower electricity selling price of PLN

Petromido|Khalsa

Director General of Electricity at the Ministry of Energy and Mineral Resources Jarman said that the new Ministerial Regulation No 19/2017 is expected to help lower the selling price of electricity by state-owned utility PT PLN to the public.

Jarman was quoted by Bisnis Indonesia a saying Wednesday that the new electricity tariff formula as set out under the new regulation will only be applied to new power purchase agreements to be signed by PLN and independent power producers (IPPs), while existing PPAs will still be based on the previous formula.

As has been previously reported by this portal, Minister of Energy and Mineral Resources Ignasius Jonan has recently issued new Ministerial Regulation No 19/2017, which among others sets new tariff formula for electricity from coal-fired power plants including mine mouth to be sold to PLN.

According to the new regulation, the tariff of electricity to be sold by IPPs from coal-fired power plants to PLN shall not exceed the national average electricity production cost base (or BPP), which currently stands at 7.5 US cents per kWh. In comparison, the tariff of electricity from mine mouth power plants based on the previous formula of production cost plus 25 percent margin, ranges from 6.9-8.2 US cents per kWh.

The regulation stipulates that electricity tariff of mine mouth power plants located in region where the BPP is equal to or lower than the national average BPP, the tariff is set maximum at 75 percent of the regional BPP. For mine mouth power plant located in region where the regional BPP is higher than the national average BPP, the tariff is set maximum at 75 percent the national BPP.

For non-mine mouth coal-fired power plants with capacity of more than 100 MW where the regional BPP is equal to or less than the national average BPP, the tariff of the electricity is set maximum equal to the regional BPP. In the case where the plant is located in region where the local BPP is more than the national average BPP, the tariff is set maximum at the national BPP.

For non-mine mouth power plants with capacity of less than 100 MW located in regions where the regional BPP is equal to or less than the national average, the tariff is set maximum at the regional BPP.

For plants located in regions where the regional BPP is higher than the national BPP, then the tariff is determined based on tender mechanism or other business to business arrangement.

According to the ministry, about 52.6 percent of electricity purchased by PLN from IPPs come from coal-fired power plants. Installed capacity of coal-fired power plants in the country stands at 28,090 MW, compared to the total installed capacity of 54,015 MW. (*)