Thaksin’s power tariff cut plan sparks debate on electricity pricing

[snoop1130]

PTTEP’s offshore oil and gas rig | Photo via PTTEP

 

By Ryan Turner

 

Thaksin Shinawatra‘s proposal to lower the power tariff from 4.15 to 3.70 baht per kilowatt-hour has ignited a discussion on the future of electricity pricing, which has remained elevated since 2022.

 

The adjustment of tariff rates directly impacts electricity bills, with a reduced tariff leading to lower costs for businesses and households. The former prime minister introduced the tariff reduction plan on January 5 during an election campaign in Chiang Rai for the Provincial Administrative Organisation chief, scheduled for February 1.

 

In the northern province, he assured voters that the government intended to reduce the power tariff to as low as 3.70 baht per unit this year. He pointed out that curbing electricity prices does not solely depend on government financial support.

 

Following her father’s suggestion, Prime Minister Paetongtarn Shinawatra noted that reducing the tariff to 3.70 baht per unit is feasible and a priority for the government. On Thursday, January 16, the Energy Regulatory Commission (ERC) suggested a plan to decrease the power tariff by 0.17 baht per unit if the government reduced its policy expenses aimed at promoting renewable energy investments. A portion of the current 4.15-baht tariff rate is allocated to support this initiative.

 

Entrepreneurs facing high energy costs and analysts seeking more suitable tariff rates have proposed their own strategies to lower electricity bills.

 

One approach to reducing power bills involves adjusting the availability payment (AP), a fundamental element of the government’s power purchase agreements with power companies, according to Isares Rattanadilok Na Phuket, Vice-Chairman of the Federation of Thai Industries (FTI).

 

Isares suggested that adjusting the AP could lower costs associated with electricity generation and distribution, alongside proposals to cut expenses related to the transport of natural gas and liquefied natural gas (LNG), which are used for power generation in Thailand.

 

 

Power purchase agreements, typically spanning 25 years, obligate the government to pay for electricity throughout the entire period, which comprises the AP, even if actual usage is lower during that time. An AP ensures a constant electricity supply to prevent blackouts but contributes to higher tariffs.

 

Isares advocated for government negotiations with power companies regarding the AP, citing an excess national electricity supply compared to demand.

 

The ERC disclosed that the AP constitutes 16% of the power tariff, while fuel costs make up 60%. Around 4% covers reimbursement to the Electricity Generating Authority of Thailand (EGAT) for financial losses incurred from previous electricity price subsidies.

 

EGAT’s losses, initially at 120 billion baht due to government directives to subsidise electricity prices amid rising gas prices following Russia’s invasion of Ukraine in February 2022, have decreased to 85.2 billion baht this month.

 

An additional 10% of the tariff is attributed to transmission costs, with 6% for distribution costs. The remaining 4% is termed policy expenses, covering state policies such as renewable energy promotion and support for the Energy Development Fund.

 

Cost surge

 

A declining domestic gas supply has led to increased imports of more expensive LNG, whose prices surged following the Russia-Ukraine conflict. Consequently, the power tariff reached a record high of 4.72 baht per unit that year and continued to rise to 5.33 baht per unit for businesses between January and April 2023, with households paying 4.72 baht per unit during the same period.

 

Isares suggested the government promote solar and wind power generation facilities, which do not require fuel, allowing power companies to save on costs.

 

Source: The Thaiger

-- 2025-01-20

 

 

[Pouatchee]

Why is he even talking politics?

Isn't he supposed to be nannying his grandchildren?

I hear more about what he does than his daughter

[hotchilli]

12 hours ago, snoop1130 said:

Following her father’s suggestion, Prime Minister Paetongtarn Shinawatra noted that reducing the tariff to 3.70 baht per unit is feasible and a priority for the government.

Just in case anyone doubted that Thaksin is the real PM

[hotchilli]

11 hours ago, Pouatchee said:

Why is he even talking politics?

Isn't he supposed to be nannying his grandchildren?

I hear more about what he does than his daughter

Puppets by nature are mute.

[watchcat]

15 hours ago, snoop1130 said:

The former prime minister introduced the tariff reduction plan on January 5 during an election campaign in Chiang Rai for the Provincial Administrative Organisation chief,

 

Vote buying much?

[bamnutsak]

3 hours ago, hotchilli said:

Just in case anyone doubted that Thaksin is the real PM

 

Yep.

 

Every day is "Bring your daughter to work day". And occasionally it's "National Nepotism Day".

[lordgrinz]

14 hours ago, Pouatchee said:

Why is he even talking politics?

Isn't he supposed to be nannying his grandchildren?

I hear more about what he does than his daughter

 

I assume he isn't too pleased with her lack of in-your-face politics that he is used to, if you want something done right, do it yourself.