Are consumers paying price for electricity mismanagement in Thailand?

Over the next four months, electricity in Thailand will soar from 4 baht per unit to a record high of 4.72 baht. Authorities blame the hike on rising global fuel prices, but critics argue that the government has a duty to cap utility bills, especially as many people are suffering COVID-related hardship.

The upcoming hike is a result of the Energy Regulatory Commission (ERC) approving an increase in the fuel tariff (FT) from September to December.

Monthly power bills list FT as one of the four charges alongside the base amount – which covers the cost of the power plant, infrastructure, power transmission – service charge, and value-added tax (VAT). So when the FT rises, so does the overall power bill.

The ERC decision means the FT will jump by 0.6866 baht to 0.9348 baht per unit from September to December.

Why this surge in FT?

ERC has cited four key reasons.

First, Thailand’s natural gas resources are running low, meaning LNG (liquified natural gas) has to be imported to fuel power plants. However, LNG prices have soared in the wake of the Russia-Ukraine war, making the production of electricity very expensive.

Second, Myanmar’s production of natural gas has dropped due to its internal problems.

Third, LNG manufacturers put their investment plans on hold due to the COVID-19 crisis, but demand has far exceeded supply, resulting in a price surge.

Fourth, Russia has reduced its supply of LNG to Europe, raising demand in the West and pushing up global prices for other regions, including Asia.

Is surplus electricity a culprit?

However, the ERC’s four reasons for higher electricity prices are only part of the story, says Itthaboon Onwongsa, deputy secretary-general of the Thailand Consumers Council.

“It looks like a surplus of electricity is another cause,” he said.

According to Itthaboon, Thailand’s power production far exceeds actual demand. In April, power consumption peaked at 33,177 megawatts, yet Thailand had a total capacity of 51,040MW that month.

“Studies show surplus energy should hover at about 15 percent of real demand, but in Thailand, that figure is as high as 55 percent,” Itthaboon said.

He explained that surplus energy comes at a cost, because authorities are required to make payments to power producers under “take or pay” contracts.

For instance, half of Thailand’s major independent power producers did not have to turn on a single machine in April but were still paid 2.166 billion baht in “availability payments” under the contracts that month. This was over and above the 700 million baht that was spent on renting a gas pipeline that was not used at all.

In a recent year, the bill for availability payments hit 29 billion baht.

“In the end, it is consumers who shoulder these availability payments because it is factored into the pricing,” Itthaboon said.

Rosana Tositrakul, a former senator who campaigns on energy issues and consumers’ rights, said the FT hike heaps more financial burden on 67 million Thais.

Based on the current rate, consumers in Thailand are already paying about 670 billion baht per year in total for electricity. The new rate would see that figure surge to 810 billion baht per year.

Itthaboon said the government has so far kept quiet about the energy surplus and ignored the fact that it should be lower.

Questions about planning, management

Rosana wondered why the Electricity Generating Authority of Thailand (EGAT)’s production capacity now accounts for just 28.7 percent of the country’s demand. EGAT is a state enterprise under the Energy Ministry.

As per the Constitution, the state is required to hold at least 51 percent of a public-utility operation vital for people’s needs or for national security. As such, the Ombudsman has ruled that EGAT is not fulfilling its constitutional duty and must be reined in by the government.

“Has the government simply ignored this ruling [from the Ombudsman]?” Rosana asked.

Itthaboon added that EGAT plans to sign contracts to buy electricity at a far higher price than usual from three hydroelectric dams in Laos.

Demands for consumer protection

Itthaboon said his council will meet with EGAT representatives on September 1 in the hope of minimizing any impacts on electricity consumers.

The council has also joined hands with several other organizations, including Greenpeace Thailand and International Rivers, for an online campaign demanding a halt on authorities signing new energy contracts.

The concern is that these new contracts may simply benefit private power producers at the expense of the general public.

Critics say there is no reason for the public to endure high electricity costs as these were incurred by poor planning or the government being overgenerous to investors. The Consumer Council’s campaign is also pressing for a fair and sustainable energy production plan.

Rosana, meanwhile, has pointed out various steps the government can take to ease people’s power-bill woes. For instance, she said, it can negotiate a lower availability payment with power producers, as well as promote the use of solar roofs through a net-metering system.

Itthaboon, meanwhile, said that if the price of electricity continues rising, it will become a necessity for people to opt for solar energy. Household solar roofs are not widely used yet because they are still relatively expensive. For instance, the installation of a 3MW solar roof can cost as much as 120,000 baht.

How will government help people?

ERC plans to offer a special discount to households that use a small amount of electricity each month. For example, households that use no more than 300 units per month will get a discount of 0.9204 baht per unit from September to December.

Meanwhile, families who use between 301 and 500 units will also get a percentage discount during that period.

The Cabinet will be asked to earmark 8 billion baht to pay for these discounts before the end of this month.

Itthaboon, however, does not agree with this approach, as he believes the government should protect all consumers, not just specific groups.

Source: Thai Public Broadcasting Service

Post Author: tmadmin