New regulations for electrical power supply businesses - International Law Office

The government has issued the Regulation on Electric Power Supply Business Activities (14/2012), which implements certain articles of the Electricity Law (30/2009).

The aspects of the law that the regulation addresses include:

• the business of electrical power supply (Articles 9 to 13 of the law);
• business and operation licences (Article 24);
• the use of land for such business (Article 30(1));
• the determination of sale prices, network leases and tariffs (Article 36);
• electricity safety, commissioning certificates, national standards and certificates of competence (Article 44(7));
• grid utilisation (Article 46);
• directives for and supervision of the business; and
• administrative penalties.

The regulation divides the electrical power supply business into two categories: supply for public needs and supply for private or own use. Both business categories require licences - an electric power supply business licence for the former and an operating licence for the latter. Business licences may be issued for a maximum of 30 years, while the maximum duration of an operating licence is 10 years. Both types of licence can be extended.

The regulation highlights certain provisions on the power supply business for public needs:

• This sector of business activity includes the generation, transmission, distribution and sale of power.
• Such activities may be conducted for private profit.
• The public use sector is open to state-owned and private entities, regional government business entities, cooperatives and non-governmental organisations.(1)
• The price of power for sale to consumers or end users must be approved by Parliament and the executive branches of government.

Regarding the power supply business for private use, Article 30 of the regulation states that an operating licence is issued according to category of use of the electricity. It identifies four categories: main, reserve, emergency and temporary.

The regulation replaces Regulation 10/1989 (as amended) and applies with effect from January 25 2012.

For further information on this topic please contact Hamud Balfas at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125), fax (+62 21 250 5121) or email (hbalfas@abnrlaw.com).

Endnotes

(1) The text of the regulations refers to "lembaga swadaya masyarakat" (self-reliance community institutions).