The growing number of gas-fuelled refineries has implications for electricity tariffs. If the price of gas falls, electricity tariffs for public and corporate users should fall too.
Arief Kamaludin|KATADATA

Perusahaan Listrik Negara (PLN) has proposed a revised scheme for calculating electricity tariffs to the government. This revision is necessary because the current scheme is no longer relevant.

PLN’s President Director Sofyan Basir said that the proposal had been submitted to Acting Energy and Mineral Resources (EMR) Minister Luhut Binsar Panjaitan at a coordination meeting, Tuesday (23/8). At the meeting, PLN asked for a review of the formula used to set electricity tariffs because the raw materials used by refineries had changed. (Read: Micro Hydroelectricity Subsidy to be Taken from Energy Fund)

Currently, electricity tariffs are based on the price of oil, inflation, and the value of the rupiah against the US dollar. This is in accordance with Article 5 of Regulation of the EMR Minister No. 30/2014 on Tariffs for Electricity Supplied by PLN.

Advertisement

But now there is the variable of new and renewable energy, such as gas prices. The growing number of gas-fuelled refineries has implications for electricity tariffs. If the price of gas falls, electricity tariffs for public and corporate users should fall too.

So, Sofyan proposed including gas prices in the monthly calculation of electricity tariffs. “But it’s just a proposal at the moment; it’s up to the EMR Ministry,” said Sofyan after a coordination meeting at the offices of the Coordinating Ministry for Maritime Affairs in Jakarta, Tuesday (23/8).

He added that the IDR 48 million government subsidy would be sufficient only if it were used to subsidise middle to low income customers, who have a 450 VA power supply. (Read: Rupiah Rallies, PLN Reduces August Electricity Tariffs)

So, Sofyan continues to press for the removal of the subsidy for 900 VA customers. “If the adjustment for 900 watts goes ahead, OK, otherwise we’ll let it (the subsidy) go, because these are people who are well off. The 450 (VA) subsidy will continue,” he said.

Director of Corporate Planning Nicke Widyawati said that PLN had just proposed the revision; the price formula was the authority of the EMR Ministry. Today, only 6.7 percent of power plants are oil fuelled, and the percentage will continue to decrease in the future.

Nicke hopes that the new formula will not just be based on refined fuel prices, but also on an energy mix, such as gas and coal, and new and renewable energy. “Our proposal is about percentages,” he said at the EMR Ministry, Wednesday (24/8).

(Read: Gas Absorption Lacking, PLN Blames Decline in Oil and Gas Production)

Nicke has shared his views with the EMR Minister. Any change in the electricity price formula also needs the approval of the House of Representatives (DPR).