Electricity tariffs: Potential 6 baht/unit increase expected next year

The Energy Regulatory Commission (ERC) proposed three options for determining electricity tariffs for the first quarter of next year. The electricity tariffs could potentially increase to a peak of 6 baht per unit. The ERC disclosed that if there are proposals lower than these three options, it would have to reconvene for further discussions today.

Komkrit Tantravanich, Secretary-General of the Energy Regulatory Commission, stated that the ERC approved the calculation of the estimated Automatic Tariff Adjustment (FTA) for the quarter of January to April. The ERC office has also been instructed to present these estimated FTA costs and the approach to addressing the actual costs incurred by the Electricity Generating Authority of Thailand (EGAT) for public comment. These will be available on the ERC’s website from November 10 to November 24.

The first option suggested is to repay all of EGAT’s outstanding costs of 95,777 million baht in a single term. This would lead to a cost of 2.16 baht per unit, combined with the estimated FTA retail rate reflecting the costs from January to April at 64.18 satang per unit. In addition to the base electricity rate of 3.78 baht per unit (excluding VAT), this would increase to 1.96 baht per unit, making it 5.95 baht per unit, up from the current rate of 3.99 baht per unit.

The second option is to repay EGAT’s 95,777 million baht outstanding costs within one year, divided into three terms of 31,926 million baht each. This would result in a cost of 1.14 baht per unit. Combined with the estimated FTA retail rate of 64.18 satang per unit and the base electricity rate of 3.78 baht per unit, this would increase the rate by 94 satang per unit, leading to 4.93 baht per unit, from the current 3.99 baht per unit.

The third option proposes to repay EGAT’s outstanding 95,777 million baht costs within two years, divided into six terms of 15,963 million baht each. This equates to a cost of 89.55 satang per unit. When combined with the estimated FTA retail rate of 64.18 satang per unit and the base electricity rate of 3.78 baht per unit, this would increase to 69 satang per unit, making it 4.68 baht per unit.

Komkrit explained that it is projected that electricity tariffs this year will increase by over 60 satang per unit, which could lead to an overall increase in electricity costs for the year. However, if there are proposals for lower rates than the three options provided, the ERC will have to reconvene with relevant agencies to consider the approach. This is because it would result in EGAT carrying more debt for electricity production costs in the future, as well as gas importers.

He added that gas prices could also be adjusted to be the same across the system, which is one way to reduce electricity production costs. This option, however, is not under the ERC’s supervision and it is unclear whether it would impact any agencies. Therefore, a joint discussion would be required. The aforementioned assumptions are based on EGAT and PTT Public Company Limited’s calculations of electricity costs under the current gas price structure. The ERC will take into account all comments and suggestions, summarise them, and make an official announcement.

Furthermore, Komkrit stated that the production of natural gas in the Thai Gulf must be monitored. It is hoped that the production capacity will be increased to 800 million cubic feet per day, up from the current 200 to 400 million cubic feet per day. Additionally, the import of Liquefied Natural Gas (LNG) must be monitored to see whether it will be long-term contracts or purchases in the market, as the former provides stability and lower costs, reported KhaoSod.

He also mentioned that the import of gas from the new Natural Gas Trader and Wholesaler (Shipper), who are seven new players, needs to be observed to see if there will be any increase. However, according to the latest information from this year, where the ERC opened a quota for imports of 3 million tonnes per year, no other parties have utilised this apart from EGAT.