Electricity Prices May Decline

The National Energy Board (DEN) is asking state power company PLN to review its suggestion to formulate a new formula for the basic prices of electricity. The DEN believes a new price formula will bring benefits to the public.

“Concept-wise, it is good. But PLN must first hold a price simulation to figure out how positive a new price scheme would be for the public. The tariffs could be a lot cheaper,” DEN member Abadi Purnomo told.

He said the opportunity to lower electricity prices arrives from the abundant power supply generated by coal-fueled power plans, which accounted for 52.8 percent of the national energy mix last year. The second largest portion is gas energy use with 24.2 percent.

PLN suggested a new price formula that will include energy mix component in the calculaton. Today’s tariffs calculations only refer to the Indonesian Crude Price (ICP), whereas the use of oil fuel for power-generation has declined from 11.7 percent in 2015 to just 6.7 percent this year.

Another DEN member Sonny Keraf also supports PLN’s proposal. He asks the government to evaluate the current electricity price formula as a way to develop new renewable energy sources.

A new, cheaper price electricity scheme will trigger industry growth, Sonny said. Industry players have always complained about Indonesia’s pricy electricity rates that prevent them from competing with other nations.

PLN’s planning director Nicke Widyawati promised to bring their proposal to the DPR.

Meanwhile, Acting Energy Minister Luhut Binsar Pandjaitan said his ministry is reviewing the suggestion.