Govt plans new power billing system

Ika Krismantari, The Jakarta Post, Jakarta

Aiming to spend less on electricity subsidies this year, the government will start billing households at progressive rates.

Director general of electricity and energy utilization J. Purwono told The Jakarta Post the policy would encourage customers to use electricity wisely and was intended to ease subsidy burdens on state power company PLN.

"There will be a reward and punishment mechanism," Purwono said, adding the policy would be applied in March.

PLN subsidizes household electricity use which accounts for almost 90 percent of total national electricity use.

The new system which rewards households that keep 2008 consumption to 80 percent of 2007's average national electricity consumption -- determined on the basis of "household groups" -- was expected to see national power consumption drop by 20 percent.

At present, households power capacity is grouped at either 450, 900, 1,300 or 2,200 watts.

Households whose consumption exceed the government's 80 percent benchmark will be subject to penalties in the form of higher rates.

Purwono said the rates would be progressively billed at 160 percent from the highest tariff recorded in a household group.

Households consuming electricity below the government's benchmark get a 20-percent discount.

"The Energy and Mineral Resources Minister has sent a letter to PLN, instructing them to apply the policy as soon as possible."

The policy would not only target households but also businesses using less than 200 kilowatts, as well as government offices. However, the ministry had not yet completed the rate scheme for business and institutions, he said.

Purwono said the policy would help the government reduce power subsidies by Rp 10 trillion (US$1.08 billion) this year.

The government is concerned the global surge in oil prices will push subsidy spending past original targets.

Based on data from the Energy and Mineral Resources Ministry, the new estimated subsidy for electricity this year is Rp 65 trillion, far above the previous estimate of Rp 29.8 trillion.

By moving the price assumption of global oil from $60 a barrel to $83, the Finance Ministry is preparing to raise its power subsidy allocation to Rp 55 trillion.

The new billing system would help the government make up the difference between the Rp 65 trillion figure and the 55 trillion it is willing to spend.