Govt power agency to dictate price in 'competition zones'

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