Daily power demand down

The Jakarta Post, Jakarta

State power firm PT PLN has managed to reduce electricity demand by some 500 megawatts (MW) each day through its recent power conservation campaign, but is aiming for a bigger reduction in demand following its plan to raise electricity charges next month.

"This (campaign) has so far saved us Rp 2.5 billion (US$255,000) per day," PLN president Eddie Widiono told reporters on Monday. "Our target is to push down the daily power demand by 1,000 MW."

Eddie emphasized that the company had no intention of hurting the country's business and industrial sector through the plan, saying it will provide rate-reducing incentives if industries shift their power utilization to off-peak hours.

"The recent fuel price hike for industrial purposes has also presented us with challenges," he said, mentioning higher power generation costs. "That is why we are currently consulting with industry to seek their understanding in the matter."

PLN recently announced that in September it will raise the multiplier it bases its rates on during the hours 6 p.m. to 10 p.m. to firms that have power utilization capacities of more than 14 kilovolt amperes (kVA) and businesses with capacities of more than 200 kVA.

PLN will also impose a penalty, doubling the rate for any electricity usage during peak hours that exceeds a set quota of half of each company's average usage.

In compensation, however, PLN will apply a discounted rate to companies that manage to shift more than 50 percent of their power usage in peak hours to off-peak hours. The policy will also be reviewed if PLN can reduce costs by converting its existing oil-fired generators to other fuels.

PLN said it has been noticing a surge in peak-hour demand after the government hiked fuel prices in March, indicating that many companies switched to using power generated by the state firm instead of generating their own electricity.

The government has effectively hiked fuel prices again this month, by allowing state oil and gas firm PT Pertamina to sell fuel oil and diesel to industry at market prices.

PLN generates electricity in a sequence using hydropower, geothermal energy, gas and coal, setting aside the more expensive oil as a last resort. Although oil-fired plants contribute only some 30 percent to the country's total power capacity, petroleum accounts for nearly 70 percent of total fuel costs.

Eddie further explained that peak-hour demand was of particular concern as it was difficult for PLN to meet the demand other than by using its costly oil-fired plants.

"Coal-fired plants, for example, do not have a fast enough response time to meet the sudden surge in demand during peak hours," he said. "But we will continue converting our plants, particularly to gas."

Eddie expected that the plan -- and state subsidies -- would be enough to reduce its costs, preventing an across-the-board rate hike.

PLN previously said it would need some Rp 8.6 trillion in subsidies for this year. The government as of June has disbursed Rp 784.8 billion in subsidies for PLN, from a total of Rp 20.1 trillion allocated to meet the public service obligations of state firms.