Power-hungry Households Get Chock Electric Rates

[george]

Rewards for conserving households

Small savings will get big reductions

BANGKOK: -- Power-hungry households could be forced to pay higher electricity rates under a new measure aimed at encouraging energy conservation.

Electricity rates for households could rise to as high as four baht per unit, or over one-third higher than the current maximum unit rate of 2.97 baht per unit.

Metta Banturngsuk, the director-general of the Energy Policy and Planning Office (EPPO), said the government planned to change the base tariff rates for residential consumers to a progressive rate system to help encourage energy savings.

Excise tax rates for diesel trucks could also be increased under the measures, he said.

EPPO and the three electricity utilities will meet today to discuss the proposed new rate structure for consumers, which could take effect as early as this month.

Existing rates are too low to encourage energy savings, Mr Metta said.

The current rate structure charges 1.88 baht per unit for the first 150 units, and 2.77 baht per unit for 151-400 units. Usage over 400 units are charged 2.97 baht each. The rates exclude monthly service fees of 40.9 baht as well as energy adjustment charges, otherwise known as the Ft charge, of 0.4683 baht per unit.

''The new base tariff will focus on charging more expensive rates to those who consume a lot of electricity, say higher than 400 units. The new maximum rate may reach four baht or higher,'' said Mr Metta.

According to EPPO, average electricity consumption of 9.33 million electricity residential consumers is only 59 units each.

This measure will effectively force residential consumers to use less electricity and as a result, the government's campaign to reduce the energy consumption will be achieved.

Mr Metta said his office would also propose to the Finance Ministry that it raise excise tax rates on diesel-powered pickup trucks.

Sales of diesel powered pickup trucks have increased significantly in recent months due to the lower price of diesel fuel compared with petrol. Diesel currently is around 3.5 baht cheaper per litre than petrol, mostly due to government subsidies.

Soaring oil prices in the global market has caused Thailand's import bills to skyrocket and economic growth to slow. Authorities earlier this month announced a national conservation programme aimed at cutting energy use by 10%.

Mr Metta said voluntary measures were insufficient, and that mandatory measures were needed to reduce energy use.

Authorities also said that they were monitoring producer prices carefully for signs of profiteering to help keep inflation under control.

According to Commerce Minister Thanong Bidaya, manufacturers must submit records detailing their production costs over the past two years if they want to seek a price increase after June 30, when a three-month price freeze programme expires.

He noted that the Internal Trade Department's moves to keep prices in check over the past five months had helped restrain inflation to 3.2%. Inflation was expected to reach 3.8% for the entire year.

Meanwhile, Kraisi Karnasuta, the governor of the Electricity Generating Authority of Thailand, said this week's decision to raise the fuel adjustment tariff, or Ft, was inevitable given rising fuel costs.

He dismissed charges by some critics that the increase was aimed at boosting the state electricity utility's revenues before it lists on the Stock Exchange of Thailand later this year.

''I think that the public well understands that raising the Ft comes as a result of higher fuel costs. If costs fall, then the Ft rate will fall as well,'' Mr Kraisi said.

Egat will use the SET listing to help raise funds for new power plants. The utility expects to invest up to 200 billion baht in improving existing power plants and the energy grid over the next five years, with financing coming both from internal cash flow and also through new loans.

Cabinet ministers earlier this year approved the sale of up to 25% in Egat in its public offering. But Mr Kraisi said that Egat would not float the entire 25% stake at once and instead would stagger the offering depending on financing requirements.

Local investors would have first right to shares ahead of foreign investors, he added.

According to Puntip Surathin, director-general of the State Enterprise Policy Office, a total of 11 state enterprises were ready to list.

Besides Egat and the TOT, other state enterprises expected to undergo corporatisation and eventual listing on the SET included the Provincial Electricity Authority, CAT Telecom, Thailand Post, the Tanning Organisation, the Industrial Estate Authority of Thailand, The Transport Co, The Government Pharmaceutical Organisation, and the Metropolitan Waterworks Authority.

Mrs Puntip said independent regulators would be established for each industrial sector to ensure fair competition and support consumer protection following the listing of the state enterprises.

Egat had net profits of 27 billion baht in 2004. The utility became a corporation earlier this year. It has debt of 226.23 billion baht and equity of 198.5 billion.

--Bangkok Post 2005-06-16

[mnoorsapl]

''I think that the public well understands that raising the Ft comes as a result of higher fuel costs. If costs fall, then the Ft rate will fall as well,''

It has to come, waiting for the right time to raise the Electricity rate.