Electricity Prices To Rise In February

[george]

Electricity prices to rise in February

Egat says increases to reflect expenses

BANGKOK: -- Electricity prices will begin to rise starting in February as subsidies on natural gas are removed, according to Kraisi Karnasuta, the president of the state power utility Egat Plc.

Price increases for natural gas have not been passed on to consumers, resulting in Egat bearing additional losses of six billion baht in total.

But Mr Kraisi said that starting in February, electricity prices would move upward ``to genuinely reflect actual expenses'' in power generation. He declined to provide estimates on the extent of the price increases.

Power prices should continue to increase through mid-2006 but will level out and begin to decline starting in October of next year, when PTT Plc's new gas pipeline becomes operational.

Mr Kraisi, speaking on Saturday at a business forum organised by Chulalongkorn University's Engineering Alumni Association, said the new pipeline would allow Egat to move away from expensive fuel oil to use cheaper natural gas instead for power generation.

Natural gas already accounts for 77% of the country's power generation, with coal accounting for another 13% and hydropower, fuel oil and diesel the rest. Egat, with a generating capacity of 15,035 megawatts, accounts for around 59% of the country's total power generating capacity.

Mr Kraisi, a 1965 graduate of Chula's engineering faculty, said power prices should fall again in 2007, when Egat plans to increase the use of gas and reduce diesel fuel use at the 710 MW Nam Phong combined-cycle power plant in Khon Kaen.

He added that investment plans for Egat could be scaled back due to the current economic slowdown.

Egat had previously announced plans to invest some 100 billion baht over the next three years to upgrade existing power plans.

The utility had previously estimated that the power grid needed additional generating capacity of 1,400 to 1,500 MW per year to keep pace with medium-term economic growth averaging 6% per year.

``But with growth this year estimated at below 5%, and likely to be 5% in 2006 as well, electricity demand estimates will also have to be revised downward,'' Mr Kraisi said.

``New investment will still be needed. But it could be that only 1,200 MW in new capacity is needed now.''

Power reserve levels, now at a relatively conservative 20%, are expected to dip to 15% in 2006 before rising again to 20% in 2007 once BLCP's 1,400 MW coal-fired plant in Map Ta Phut goes online.

Mr Kraisi said Egat was now reviewing its investment plans following the delay in the company's listing on the Stock Exchange of Thailand.

The Supreme Administrative Court suspended Egat's initial public offering this month after a legal challenge filed by local consumer groups. Authorities insist that the market listing is needed to help raise capital to finance future investment.

``Even though [the IPO] will happen later than expected, our investment projects in the pipeline still need to move forward,'' Mr Kraisi said.

Oil prices, meanwhile, are likely to ease in the near future, according to Prasert Bunsumpun, president of state oil conglomerate PTT Plc.

``Some had forecast that oil prices could rise to $80 or $100 per barrel in the near future. But I think that is increasingly unlikely,'' said Mr Prasert, a member of the class of 1971.

Oil prices had spiked in recent months due to supply constraints and concerns about instability in the Middle East.

Mr Prasert said Dubai oil, previously estimated to reach $60 to $70 per barrel, was now trading $10 cheaper, with petrol and diesel similarly priced lower than earlier estimates.

In any case, he said PTT planned to increase its investments in petrochemicals over the next several years, with the company's five-year plan likely to be raised to 240 to 250 billion baht from the previous budget of 210 billion.

The company, the largest and most profitable firm on the Stock Exchange of Thailand, expects 2005 revenues to reach 900 billion baht for the full year, thanks in part to the sharp increase in energy prices in the world market.

--Bangkok Post 2005-11-28

[Firefan]

prices to drop in 2006 and 2007...? Hmm.... I will believe it when I see it.

Now gotta go down to pay the B 2600 bill from last month....

Cheers!