Power rates to increase by average 8.19%

JAKARTA (JP): The government said on Tuesday it would raise electricity rates by an average of 8.19 percent starting next month to mark the second and last stage of last July's 17.47 percent increase.

State electricity company PLN will gain a revenue boost of Rp 1.4 trillion (about US$147.36 million) from the increase, said Minister of Energy and Mineral Resources Purnomo Yusgiantoro in a hearing with House of Representatives Commission VIII.

Last July, the government and legislators agreed to raise power rates by an average 17.47 percent to help the financially ailing PLN.

Last year, the company's net loss surged to Rp 26.61 trillion, more than double the net loss recorded the previous year.

PLN largely blames its losses on the strong dollar, which made power purchases from independent power producers here expensive.

Combined with last July's power rate increase, PLN will enjoy a revenue boost of about Rp 2.3 trillion this year.

Purnomo, however, added that the increase was not enough to prevent PLN from remaining in the red this year.

PLN president Eddie Widiono has predicted the company will still suffer losses of around Rp 4.5 trillion this year.

October's power hike will be part of a two-stage power rate increase that began last July.

Depending on the installed power capacity and consumption rate, household customers were subject to an increase of between 22.3 percent to 62.9 percent in July.

The rates will increase another 9.7 percent to 20.6 percent in October.

Industrial customers faced an increase of between 13.8 percent and 14.6 percent in July, with another 3.6 percent and 4.2 percent next month.

Exempt from power hikes are poor households with an installed power capacity of only 450 volt-ampere.

These, however, account for around 67 percent of PLN's total 28.9 million customers, Eddie said.

PLN data shows that industrial customers account for about 42 percent of PLN's revenue, household about 40 percent, businesses about 13 percent.

The rest is divided among public facilities with 3 percent, and social institutions with only 2 percent.

The government hikes power rates to cut subsidy spending on electricity, and thus ease pressure on the state budget.

Although an unpopular move, reducing subsidy spending, including that for fuel, is part of the government's economic reform.(bkm)