Electricity Tariff Pricing in Indonesia: An Econometric Analysis

Using Electricity Demand in the Residential Sector

Syamsir Abduh
Jurusan Teknik Elektro-FTI Universitas Trisakti, Jakarta
E-mail : syamsir@trisakti.ac.id;the_abduh@hotmail.com
Telp/Fax : 021-5663232 Ext. 421/021-5605841

Abstract
The electricity utility industry in developed countries has been the subject of numerous econometric studies over the
years. As for any other commodity, the statistical analysis for electricity demand is based on the same economic
concept, such as tariff pricing, income level and other relevant variables. Although several attempts have been made
in recent years to prepare a usable electricity demand forecast for Indonesia, none of them have ever tried to
incorporate both impact of the tariff pricing and income level to electricity consumption. One major difficulty in
establishing an econometric model for electricity demand in Indonesia is the fact that the market for electricity is
segmented marker, because electricity is not fully accessible throughout the country. This paper describes various
estimation methods which utilize pooling technique by using data from 1990 to 1998 of the sixteen PLN regions
(PLN, National Electricity Corporation of Indonesia). The results for residential sector conform to our expectations.
From a policy point of view, this paper suggest several important results. Tariff pricing, as well as income and output
level, do have significant impact on electricity consumption.

Kata Kunci : Electricity tariff pricing, residential sector.