Govt power agency to dictate price in 'competition zones'

Fitri Wulandari, The Jakarta Post, Jakarta

The government is preparing to select officials for a powerful new agency with tasks that would include dictating electricity prices and controlling competition in the country's soon-to-be deregulated/open competition power sector.

The agency, called the Electricity Market Regulatory Board (Bapeptal), will be run by five officials, although existing regulations allow the board to have up to 11 members, said Yogo Pratomo, director-general of electricity and energy utilization, last week.

"It (board membership) is open to the public," he said, adding that any one who is a university graduate and has extensive knowledge about electricity can be a candidate.

He added that the selection process would be announced in the mass media to ensure transparency and wider public participation.

The Ministry of Energy and Mineral Resources, and an independent consultant will select 10 candidates for the Bapeptal board members.

"The ten candidates would be proposed to the House of Representatives who will do interviews and come up with a shortlist of five people," Yogo said.

If the process went well, Yogo said, the Bapeptal may be established by the end of the year.

The plan to set up Bapeptal is one of the steps being taken to liberalize the country's power sector as stipulated under Electricity Law No. 20/2002, which aims to eventually end the decades-long monopoly of state-owned electricity company PT Perusahaan Listrik Negara (PLN).

It is hoped that the law will lure new investors into the power sector, although some critics claim that scrapping the PLN monopoly would somehow mean an increase in electricity prices, and thus hurt consumers.

The power sector liberalization drive will take place in regions declared competitive zones. Those are where electricity demand is high. The heavily populated Java-Bali region and the industrial island of Batam will, in the near future, become the first such competitive zones.

When an area is liberalized under that law, any private company will be allowed to generate power and sell directly to the public. They will also be allowed to set up their own distribution and transmission networks in cooperation with the government or use the state-owned network now operated by PLN to supply power, however pricing will be the task of Bapeptal.

Bapeptal will be set up in the competition areas, however they will have the power to rule on power prices, and anything else that will "prevent unhealthy competition" in order to guarantee power supply for consumers.

Working Group on Power Sector Restructuring, a non- governmental organization, urged the government not to be in a rush to establish Bapeptal because the agency would have a mammoth task in the future in providing access for energy to the public.

The establishment of Bapeptal, the group said, must involve wider public consultation, particularly consumers, who will be vulnerable to the new market structure.

"Candidates who meet the requirements (for Bapeptal members) must be open to public scrutiny," the group said.

I-box

Duties of the Bapeptal

- Regulate and supervise the business of power distribution in competition regions. - Secure power supply - Set power prices, facility fees, transmission leasing fees and power distribution fees. - Issue licenses for power supply companies - Prevent unhealthy competition - Resolve disputes which arise from competition