PLN eyes power-pricing adjusted

PLN eyes power-pricing adjusted

The Jakarta Post, Jakarta

State power company PT PLN has made a proposal to apply an
automatic pricing adjustment scheme, starting next year, to keep
up with the fluctuating costs in generating power.

The firm will apply the method to households that use more
electricity next year, PLN president director Eddie Widiono said
on Thursday.

"We will (then) apply this to customers that don't use much
power too, like those (using low voltage) of 450 VA (volt
ampere), by 2007," said Eddie.

PLN charges different prices for different neighborhoods
and/or businesses depending on their power capacity and usage.

At present, it cannot change the rates without approval from
the government and the House of Representatives.

With the automatic adjustment scheme, prices will be changed
periodically according to the fluctuation of its cost elements,
such as fuel prices, inflation, rupiah rate against the U.S.
dollar, and contract prices to buy power from private producers.

"Usually the prices are adjusted every three months," said
Eddie.

PLN has seen its power generation costs rising since March,
when the government raised domestic fuel prices by 29 percent.

Another headache is underway as the House's budget commission
has recommended that PLN pay a special market price -- fixed at
Rp 4,740 for the rest of the year -- instead of Rp 2,200 it pays
currently for high quality diesel, for some 3 million kiloliters.

The commission also recommended that the company's subsidy for
poor customers be increased from Rp 4.1 trillion to some Rp 12.5
trillion in the second revision to the state budget.

"Last year, we managed to book operational income," said
Eddie. "But with the current prices, we'll surely see an
operational loss," he added.

PLN booked an operational income of Rp 2.56 trillion (US$256
million) last year, the first time since the monetary crisis in
1997 prompted a string of losses. The company recorded net losses
at Rp 2.02 trillion in 2004.

It is still unclear whether the power utility will get
subsidized prices for the high quality diesel it uses next year
or if it will follow the market prices applied currently to
industries.

PLN uses the more expensive petroleum fuel to fire up power
plants if electricity produced by utilizing hydropower,
geothermal, gas, and coal proves to be insufficient.

The company usually turns to oil-based fuels to fire its
plants as power demand jumps during the peak hours between 5 p.m.
and 10 p.m.

Although oil-fired plants contribute only around 30 percent of
the country's total power capacity, close to 70 percent of the
nation's total power-generation costs are attributed to petroleum
fuel.