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Energy activists and politicians are voicing their concerns over a decision made by an Energy Regulatory Commission (ERC) subcommittee to reduce electricity rates from May to August. They argue that this action does not address the real reasons behind the high power bills that citizens are facing.
On Friday, the subcommittee approved the fuel tariff (Ft) rate adjustment, reflecting changes in fuel costs and other variables. The full ERC board is expected to vote on the proposal on Monday. The recommended adjustment would result in a 1.5% reduction in household electricity bills, lowering the cost to 4.70 baht per kilowatt-hour from the previously planned 4.77 baht, from May to August.
This move was initiated in response to the public’s complaints about significant increases in their electricity bills during the hot summer months. An anonymous source from the Ministry of Energy revealed that the ERC panel made its decision after the Electricity Generating Authority of Thailand (Egat) proposed a 28-month moratorium on debt repayments.
The Ft, a crucial component of the power tariff, is reviewed by the ERC subcommittee every four months. Power tariffs are also influenced by debts owed to Egat, which reported an accumulated loss of 150 billion baht after subsidizing electricity prices from September 2021 to December 2022.
Rosana Tositrakul, an energy advocate and former Bangkok senator, states that the high power bills can be attributed to the costs associated with importing liquefied natural gas (LNG). According to her, Egat has purchased 70% of its electricity from a private company while producing only 30% itself. Egat buys electricity from the private company at 3-9 baht per unit and resells it to the Metropolitan Electricity Authority and the Provincial Electricity Authority at 2.75 baht per unit.
Tositrakul suggests that if Egat were to produce more electricity, people could benefit from lower rates. She highlights the current contract with the private company that requires the government to make availability payments regardless of actual electricity production. This arrangement has resulted in a 40 billion baht debt and a payment of over 100 billion baht to purchase electricity. In total, Egat is burdened with a debt of around 150 billion baht, which contributes to the Ft rate.
Tositrakul explains, “When Egat buys expensive electricity but sells it at cheap rates, the accumulation of debt follows, and Egat and consumers have to shoulder the expensive costs while the private sector reaps the profits.”
A temporary reduction in electricity rates is expected from May to August; however, the rates will likely increase again afterward, or Egat will be unable to repay its debts. Tositrakul ponders, “No one engages in a policy of buying expensive and selling cheap. This raises suspicion about alleged irregularities.”
Chartpattanakla Party leader Korn Chatikavanij suggests that the government eliminate the Ft rate for the four months to alleviate high bills. He points out that Egat’s production costs have decreased as LNG prices continue to fall and recommends an overhaul of the electricity production industry’s structure.
Chatikavanij emphasizes, “The government needs the political courage to overhaul the structure and liberalize the sector by allowing people to invest so we don’t have to rely on big businesses and state enterprises to build large power plants.