Influence of fuel price, electricity price, fuel consumption on operating cost, generation and operating income: a case study on PLN

Abstract

Purpose This study aims to explore the influence of fuel price, electricity price, fuel consumption (FC) on operating cost, generation and operating income (OI), and how to get the optimized electricity generation (EG) through the operation plants mix economically. Design/methodology/approach This study is the kind of explanatory research that describes the influence of dependent variable on the independent variable through hypothesis testing. The unit of analysis in this study is PT PLN (Persero) data, and the data is represented by the company’s statistical data from 2004 to 2019. The inferential statistical method is used to analyse the variance in this study-based or component-based with partial least square using the software of SmartPLS 3.2.9. Findings The fuel price of generation has a positive significant effect on the average electricity price in both models, a negative significant effect on the FC in model A and a positive significant effect in model B, a positive significant effect on the EG in the model A and negative significant effect in the model B, a positive significant effect on the operating cost of generation in both models, and a positive significant effect on OI in both models also. Originality/value To the best of the author’s knowledge, this paper is the first to study the influence of generation fuel price, electricity price, FC on operating cost, EG and OI of the power company and using a complex research design with partial least square.