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NEWS UPDATES Asean Affairs        4  April 2011

Businesses Agree to Late-Night Power Discount

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Perusahaan Listrik Negara, the State Electric Company, and businesses have agreed to cut overnight power rates by half in exchange for saving electricity during the day, a power utility executive said on Sunday.

“We have an agreement with manufacturers to give a 50 percent discount to companies that are able to reduce more than 50 percent of their power use during [peak hours],” Benny Marbun, the head of PLN’s commercial division, said on Sunday. The agreement was signed on Friday.

The plan affects about 1,000 companies operating in Java and Bali. The companies, mostly manufacturers, will see their electricity rates lowered for industrial use between 11 p.m. and 7 a.m.

During the peak hours of 5 p.m. to 10 p.m., PLN says it has to produce 5,000 extra megawatts of electricity to meet demand. The change is aimed at encouraging factories to shift their operations to off-peak hours to help balance out usage and cut outages.

“For example, let’s say one company needs 10 MW during the day to run its operations. If the company only uses 4 MW during the day and keeps the other 6 MW for late-night use, then for that late-night use, the company deserves a 50 percent discount,” Benny said.

Industries pay an average of Rp 730 (8 cents) per kilowatt hour. Under the new plan, they will pay Rp 550 per kwh for the overnight hours.

PLN said it evaluated power usage during the past three months before implementing the rate change.

The utility provider has been under pressure to bring down its operational costs as coal prices continue to rise. The government ordered PLN last month to stop using diesel to fuel its power plants and switch to cheaper coal or natural gas.

A lack of infrastructure for gas distribution was blamed for its persistent dependence on more expensive diesel.

Last month, Energy Minister Darwin Zahedi Saleh proposed to lawmakers a Rp 16.9 trillion increase in electricity subsidies to cope with high coal prices and shrinking gas supplies. If lawmakers approve the proposal, power subsidies will increase to Rp 57.6 trillion.

The government originally set aside only Rp 40.7 trillion for power subsidies in the 2011 state budget.

PLN has said increasing coal prices and an insufficient gas supply have forced its production costs to increase to Rp 60 trillion. Peak electricity loads for Java and Bali have reached 18,365 MW, 1,000 MW higher than last year, the utility said.

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