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ERC approves rise in cost of electricity

Sep 06. 2012
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By Watcharapong Thongrung,

Wat

The Energy Regulatory Commission (ERC) yesterday approved an increase of 18 satang per kilowatt-hour in the cost of electricity during the September-December round, with a promise of further hikes in the next three periods to reduce subsidies by the Elect

"The Ft [fuel tariff] is likely to increase further in the next rounds, on rising fuel prices and a weakening baht," said Direk Lawansiri, chairman of the ERC.

"Next July, the base charge will also be reviewed. To reflect the actual cost, Egat, the Metropolitan Electricity Authority and Provincial Electricity Authority will be required to reveal detailed costs of each power plant. The current Ft could also be brought down to zero, as it would be included in the base charge."

This week, the subcommittee overseeing the price of electricity agreed on a rise in the Ft by 38.24 satang per unit, against a proposal of 45 satang. As the Ft was raised less than asked, Egat will have to shoulder Bt10.5 billion in subsidies for this round, on top of the Bt14 billion carried over from the previous four-month round.

Direk said after the meeting yesterday that the Ft for the September-December period would be 68.24 satang per unit, because of the increase in prices for all types of fuel used to generate power.

Natural gas is now priced at Bt317.50 per million British thermal units (BTU), up from Bt301.28 in the previous four-month round. Coal is at Bt3,227.48 per tonne, up from Bt2,926.54; bunker oil has risen from Bt25.87 a litre to Bt26.49. A weaker baht against the US dollar than in the same period last year also boosts energy prices, as Thailand is a net energy importer.

The Ft is subject to revision every four months, depending on the prices of fuel. In the previous round, Ft was raised by 30 satang.

"We cleared this up with Egat and it will gradually be compensated for the subsidy, through a hike in Ft in the three subsequent rounds – 6.55 satang per round," Direk said.

At present, the base rate of Bt2.7628 is levied on households using fewer than 150 units a month; Bt3.7362 for those consuming 151-400 units; and Bt3.9361 for those consuming more than 400 units. The base charge excludes Ft and a monthly service fee of Bt38.22.

Egat governor Sutat Patmasiriwat said it could shoulder some subsidies, but they should not be carried over a long period, as that would affect the agency’s finances. For the investment of Bt60 billion for next year, Egat will need to borrow 75 per cent.

"Egat’s debt remains less than Bt100 billion. We don’t have problems with borrowing, but that should be done for investment, not for subsidies," he said. As oil prices are expected to stabilise next year, the ERC should gradually raise the Ft to clear the subsidies, he added.

According to Egat, Thailand’s power consumption increased 8 per cent in the first half but annualised growth should be 6 per cent as targeted.

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