'PLN should review rates hike plan'

'PLN should review rates hike plan'

The Jakarta Post, Jakarta

Legislators demanded on Monday that state electricity company PT PLN review its plan for raising power rates in October this year, saying current rates were already too high.

PLN has been allowed to raise power rates each quarter toward a level of 7 U.S. cents per kilowatt-hour (kWh).

However, several legislators branded the targeted rate as "unrealistic," demanding the state firm cancel its plan to raise its rates for the last quarter of the year.

Tjetjep Rukmana, a legislator who spoke out against the rate increase plan, said the 7-cent rate was too high and burdensome on the public.

"Most importantly, the figure is not competitive compared with those imposed in other Asian countries, where the normal rate is 5 cents per kWh," he said during a hearing between PLN and House Commission VIII on energy resources.

During the hearing, PLN president Eddie Widiono strongly defended the 7-cent rate, saying it was an economic price for power produced by PLN.

"Seven cents per kWh was the price enjoyed by PLN before the economic crisis," he said.

He added that, thanks to past increases in power rates, PLN was able to accumulate funds for investment to avoid a power crisis in the future.

He said power rates now stood at Rp 585.17, or 6.88 cents per kWh, up from 549.6 (6.15 cents) per KwH the previous quarter. Should PLN again raise its rates in October, they would reach Rp 610.62, or 7.18 cents per kWh.

At the start of the hearing, Eddie insisted PLN would go ahead with raising its rates in October but it remained unclear if the firm would dare to do so, given the strong opposition from legislators.

Under the existing law, PLN need only obey the government's instructions.

During the hearing, Eddie also said that depending on the government's request, PLN might freeze its rates throughout next year to "maintain security" during the general election. Rises in power rates have often sparked public protest in the past.

Separately, PLN announced that it was offering incentives to those of its largest customers who were willing to reduce their power usage or shift their activities from peak load hours in the coming months, when power supplies were predicted to drop due to the long drought.

PLN commerce and customer service director Sunggu Anwar Aritonang said the incentives included a 25 percent rate discount.