Are consumers paying the price for poor electricity management in Thailand?

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Over the next four months, electricity in Thailand will rise from 4 baht per unit to an all-time high of 4.72 baht. Authorities attribute the rise to rising global fuel prices, but critics say the government has a duty to cap utility bills, especially as many people suffer COVID-related hardship.

The upcoming hike is the result of the Energy Regulatory Commission (ERC) approving a Fuel Tariff (FT) increase from September to December.

Monthly electricity bills list the FT as one of four charges alongside the base amount – which covers the cost of power station, infrastructure, power transmission – service charge and value added tax (VAT). So when the FT increases, the overall electricity bill also increases.

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

Why this skyrocketing of the FT?

The ERC cited four main reasons.

First, Thailand’s natural gas resources are running out, which means LNG (liquefied natural gas) must be imported to fuel power plants. However, LNG prices have skyrocketed in the wake of the Russian-Ukrainian war, making power generation very expensive.

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

Third, LNG manufacturers suspended their investment plans due to the COVID-19 crisis, but demand far outstripped supply, leading to price spikes.

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

Is excess electricity to blame?

However, the four reasons given by the ERC to justify the increase in electricity prices are only part of the story, says Itthaboon Onwongsa, deputy secretary general of the Consumer Council of Thailand.

“It seems that a surplus of electricity is another cause,” he said.

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

“Studies show that excess energy is expected to hover around 15% of actual demand, but in Thailand that figure is as high as 55%,” Itthaboon said.

He explained that excess power comes at a cost, as authorities are required to make payments to power generators under “take or pay” contracts.

For example, half of Thailand’s major independent power producers didn’t have to turn on a single machine in April, but still received 2.166 billion baht in “availability payments” under the contracts this month. the. This was on top of the 700 million baht spent on leasing a gas pipeline that was not being used at all.

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

“Ultimately, consumers are the ones who make these uptime payments because they’re factored into pricing,” Itthaboon said.

Rosana Tositrakul, a former senator who campaigns on energy issues and consumer rights, said the FT’s rise is increasing the financial burden on 67 million Thais.

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

Itthaboon said the government had 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 generation capacity of the Electricity Generating Authority of Thailand (EGAT) is now only 28.7% of the country’s demand. EGAT is a public company under the Ministry of Energy.

In accordance with the Constitution, the State is required to hold at least 51% of a vital public utility operation for the needs of the population or for national security. As such, the Ombudsman ruled that EGAT is not fulfilling its constitutional duty and must be curbed by the government.

“Did the government simply ignore this decision [from the Ombudsman]?” Rosana asked.

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

Consumer Protection Requests

Itthaboon said his council would meet with EGAT representatives on September 1 in hopes of minimizing any impact on electricity consumers.

The council has also teamed up with several other organisations, including Greenpeace Thailand and International Rivers, for an online campaign demanding that authorities stop 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 bear high electricity costs because these have been incurred through poor planning or the government being overly generous to investors. The Consumer Council campaign is also pushing for a fair and sustainable energy plan.

Rosana, meanwhile, highlighted various steps the government can take to alleviate people’s electricity bill problems. For example, she said, it can negotiate a lower uptime payment with power producers, as well as promote the use of solar rooftops through a net metering system.

Itthaboon, meanwhile, said if the price of electricity continues to rise, it will become a necessity for people to switch to solar power. Home solar roofs are not yet widely used because they are still relatively expensive. For example, installing a 3 MW solar rooftop can cost up to 120,000 baht.

How will the 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 receive 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 this time.

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

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

By General Office of Thai PBS World

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