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.