ERC mulls 31% electricity tariff hike despite lower fuel costs
Businesses and households are facing a significant decision regarding the future of their electricity costs as the Energy Regulatory Commission (ERC) considers changes to the power tariff. Despite a projected decrease in fuel costs, the ERC is evaluating whether to maintain the current rate or implement an increase of 26 to 31% early next year.
The existing tariff, set at 4.18 baht per kilowatt-hour, is in effect until December 31. A public opinion survey is currently being conducted online by the ERC, with the results influencing the new rate to be announced for January to April 2025.
The proposed tariff increase is driven by the need to address financial losses incurred by the Electricity Generating Authority of Thailand (EGAT) from previous electricity price subsidy programmes. Additionally, part of the electricity bill is allocated to EGAT and PTT Plc to compensate for their sales of natural gas at rates below market value, aimed at stabilising electricity prices.
Natural gas, sourced domestically and through liquefied natural gas (LNG) imports, constitutes 60% of the energy used for power generation in Thailand. Although LNG prices in the spot market are anticipated to decrease slightly by US$0.2 (6.84 baht) per million British thermal unit, electricity bills remain high.
The possibility exists for increased gas production from the Gulf of Thailand, which is more cost-effective than LNG. However, financial constraints remain.
“We are unable to reduce power bills because of the debt owed to Egat and PTT,” stated Poonpat Leesombatpiboon, the secretary-general of the ERC.
During a meeting held yesterday, November 8, the commission deliberated on the new power tariff and proposed three options for public consideration. The first option suggests a 31% rise to 5.49 baht per unit, allowing full repayment of EGAT’s 85.2 billion baht debt by April next year. This rate also facilitates settling gas sales debt of 15 billion baht.
Alternatively, the second option proposes a 26% increase, resulting in a 5.26 baht per unit tariff. This would enable the ERC to clear only the debt owed to EGAT.
The third option proposes maintaining the current tariff of 4.18 baht per unit, benefiting businesses and households, but permitting repayment of only 15 billion baht to EGAT.
“The debt is still high. We need to think about these financial burdens to maintain the stability of the national electricity system.”
The ERC is inviting public feedback on these tariff options via its website, with the consultation period open until November 22, reported Bangkok Post.
What Other Media Are Saying
- Onmanorama reports the Kerala Electricity Regulatory Commission’s restoration of four power agreements, enabling 445 MW electricity purchase, emphasising the need for compliance and vigilance from power producers to avoid penalties. (read more)
- New Indian Express reports the Telangana Electricity Regulatory Commission has denied a power tariff hike for high tension consumers, maintaining existing rates for all categories while approving a reduced aggregate revenue requirement. (read more)
Frequently Asked Questions
Here are some common questions asked about this news
Why might the ERC choose to increase electricity tariffs despite decreasing fuel costs?
The ERC considers raising tariffs to address past financial losses and debts incurred by electricity subsidy programmes.
How could maintaining the current electricity rate impact Thailand’s energy stability?
Keeping rates unchanged might limit debt repayment, potentially jeopardising the financial stability of the electricity system.
What if Thailand increased its gas production from the Gulf of Thailand?
Boosting domestic gas production could lower costs, but financial constraints may hinder significant changes to electricity bills.
How does the ERC balance public opinion with financial necessities in setting tariffs?
The ERC uses public surveys to gauge preferences but must also consider the financial health of electricity providers.
What role do market rates for natural gas play in Thailand’s electricity pricing strategy?
Market rates influence costs, but debts and subsidies also significantly impact electricity pricing decisions.
