Uniform Electricity Tariff (TDL)
Policy measure

According to USAID (2008), a Uniform Electricity Tariff (TDL) has been set in Indonesia since 2003. The current tariff is nearly 80 percent below the costs of many diesel-based isolated networks and has a substantial impact on all aspects of clean energy development.

Implementation

The following developments in the TDL have taken place since 2003 (USAID, 2008):

  • β€œIn 2004, plans to increase the tariff to $0.08/kWh were scrapped as a result of the pending elections. Several stakeholders believe that one of the best opportunities for increasing the tariff will be during the first two years of a new administration.

  • With elections scheduled for 2009, the time might be right to support an electricity tariff reform program, focused on impact analysis and a public information campaign targeting specific stakeholders known to oppose tariff increase.

  • Building sufficient consensus and the political is required to implement the current plans for a 30% tariff increase in 2010 would be an important first milestone for this program.”

Challenges
No identified challenges.
Outcomes

The following negative impacts of the TDL include (USAID, 2008):

  • β€œA strong disincentive for PLN to connect any new customers because of their inability to recoup the cost of service in rural areas.

  • A significant strain on the fiscal space of the Indonesian government with overall electricity subsidies around 88 trillion IDR per year (2% GDP) in 2008.

  • Inability of IPPs to obtain financing because of lenders concern about the fiscal health of PLN.

  • Disincentive for PLN to add any renewable generation technology that could increase the cost of generation.

  • Disincentive for effective DSM and energy efficiency practices (e.g. reduction in fuel subsidies led to a 9% reduction in domestic oil use in 2005).

  • Inability of PLN to make capital investments needed to improve system efficiency.”

References

USAID (US Agency for International Development), 2008. Indonesia Energy Assessment. Washington, DC.