Poor to be hit hardest by power price hike

Poor to be hit hardest by power price hike

Moch. N. Kurniawan and Tantri Yuliandini, The Jakarta Post,
Jakarta

Low income households will have to pay on average a whopping 15
percent increase in electricity rate every three months next
year, while rates for high-income families will only increase by
an average of 8 percent during the same period, under the new
electricity rates proposal announced by the government on
Wednesday.

The increase in electricity rates for low-income households is
the largest in the new power-pricing scheme.

Luluk Sumiarso, director general of electricity and energy
utilization at the Ministry of Energy and Mineral Resources said
that despite the hefty increase, power prices payable by low-
income households next year were still lower than the production
costs of state electricity company PT PLN.

"Although low-income customers will pay the largest increase,
the prices will still remain affordable in nominal terms," Luluk
said.

He also noted that most low-income families living in houses
with an installed power capacity of between 250 voltampere (VA)
and 450 VA had been exempted from increases in electricity rates
over the past two years.

The new pricing scheme, if approved by President Megawati
Soekarnoputri, will come into force in January next year.

Luluk said the pricing scheme was based on the agreement
reached by the House of Representatives and the government last
month to increase electricity rates by an average of 6 percent
every three months next year.

Under the plans, electricity rates for households with an
installed power capacity of 250 VA would jump by 16 percent in
the first quarter, 15 percent in the second quarter, 15 percent
in the third quarter and 12 percent in the fourth quarter.

A 250 VA power capacity is enough for a household to switch on
several lamps at night but the family has to switch off several
lamps in order to switch on their television set.

Rates for households with an installed capacity of 450 VA
would increase by 15 percent, 16 percent, 18 percent and 19
percent in each quarter respectively.

With a 450 VA power capacity, a family can use their
television sets and lamps at the same time, but they can't use
other electronic devices, such as iron.

Rates for middle-income households with an installed power
capacity of 2,200 VA will increase by 8 percent in the first
quarter, 9 percent in the second quarter, 8 percent in the third
quarter and 7 percent in the fourth quarter.

This group of customers can use their television set, home
computer, freezer and air conditioner at the same time at night.

Rates for small industrial customers would increase by an
average of 7 percent for every three months next year, while
large companies have to pay a 4 percent increase during the same
period.

PLN's finance director Parno Isworo said the hike would enable
PLN to receive another Rp 10 trillion (US$956 million) in revenue
next year, but the cash-strapped company would still suffer
losses of about Rp 1 trillion.

Indah Sukmaningsih, chairwoman of the Indonesian Consumers
Foundation (YLKI) blasted the new pricing scheme, saying it was
unfair that the salaries of customers would not increase
correspondingly every three months next year.