PLN to increase power charges for industry

Leony Aurora, The Jakarta Post/Jakarta

State power firm PT Perusahaan Listrik Negara (PLN) will raise electricity charges for industrial users during peak hours and will impose penalties for over-quota power usage starting September, raising concerns of higher costs in the industrial sector.

PLN will raise the multiplier used between 6 p.m. and 10 p.m. to 2 from the current figure of between 1.4 and 1.5 set for Java, Bali, Sumatra, Kalimantan and Sulawesi, meaning that peak-time electricity will be twice as expensive as that utilized during off-peak times, the company's marketing and services director Sunggu Anwar Aritonang said on Wednesday.

"The new multiplier will be effective as per September," he told reporters after a meeting with industrialists. "We will issue the decision as soon as possible."

The policy would be applied to firms that have power utilization capacities of more than 14 kilovolt amperes (kVA), as well as to government offices, charitable organizations and businesses with capacities of more than 200 kVA.

On top of a higher multiplier, PLN will also impose a penalty for electricity usage during peak hours that exceeds the set quota, defined as half of each company's average usage.

The penalty, applicable only to the additional consumption, is twice the rate used in peak hours, or four times the rate in regular hours.

The Ministry of Industry's secretary-general, Agus Tjahayana, said that industry players understood PLN's difficult position as global oil prices soared and demand increased.

According to PLN, peak-hour demand surged after the government hiked fuel prices in March, indicating that many companies switched to using power generated by the state firm instead of producing their own electricity.

In compensation for the higher multiplier, PLN will apply a discounted tariff to companies that manage to shift more than 50 percent of their power usage in peak hours to off-peak hours, Aritonang said.

Executive secretary of the Indonesian Textile Association, E.G. Ismy, who attended the meeting, said it would be impossible to shift electricity consumption to off-peak hours as the industry worked around the clock.

Power contributed 30 percent of production costs for spinning operations and 18 percent for weaving operations, he said.

"Fuel prices (for industry) have been increased, and now electricity charges. How can we possibly compete with China?" Ismy asked.

"The only way (to cut power usage during peak hours) is by reducing production, which will mean laying off workers," Ismy added.

Yos Rizal Anwar of the Indonesian Foundry Industries Association said industry players would comply with the new policy. "We will try to save energy and make use of the power packages offered by PLN," he said.

Aritonang said that as PLN diversified its energy sources to non-oil fuels, the new policy could be reviewed.

PLN generates electricity in a sequence, utilizing first hydropower, geothermal energy, gas, coal and, lastly, the more expensive oil if the power produced by the other types of power plants proves to be insufficient.

Although oil-fired plants contribute only some 30 percent of the country's total power capacity, petroleum accounts for nearly 70 percent of total fuel costs.

PLN has said that it will need 11.44 million kiloliters (kl) of oil to generate power this year, higher than its quota of 8.35 million kl of subsidized fuel. State oil and gas firm PT Pertamina has said that PLN may have to pay market prices for the additional supplies.