Thailand: Companies hit with 20% power hike

The Energy Regulatory Commission (ERC) has decided to maintain the power tariff at 4.72 baht per kilowatt-hour (unit), keeping electricity bills for households unchanged for the first four months next year, but it plans to increase the tariff imposed on businesses.

Although the decision will help people deal with high living costs, Isares Rattanadilok Na Phuket, vice-chairman of the Federation of Thai Industries, said on Thursday he was “very disappointed” with the announcement because entrepreneurs are also struggling to deal with energy prices.

The ERC will increase the power tariff for the non-household sector by 20.5% to 5.69 baht per unit, up from 4.72 baht per unit.

The non-household sector includes businesses of all sizes, including hotels, farms and non-profit organisations.

The 4.72-baht rate has been used since September this year, and is likely to increase to nearly 6 baht due to higher fuel prices, especially driven by more imports of expensive liquefied natural gas.

The fuel tariff (Ft), a key component of the power tariff, is based on estimated prices of natural gas that are used as fuel for power generation — 238 baht per metric million British thermal unit (MMBTU) for households and 542 baht per MMBTU for non-households, according to the ERC.

The Ft stands at 0.9343 baht per unit for households and 1.904 baht per unit for non-households.

The tariff is adjusted every four months to correspond with changes in energy prices.

ERC secretary-general Khomgrich Tantravanich said the power tariff decision resulted from talks with the National Energy Policy Council and fuel suppliers over attempts to ameliorate the impact of expensive electricity bills.

He said the new power tariff was aimed at helping the state-run Electricity Generating Authority of Thailand (Egat) better deal with its balance sheet, after running up losses of 125 billion baht by helping the government cap electricity prices.

Mr Khomgrich expects Egat to take around two years to recoup its money.

Mr Isares said the Joint Standing Committee on Commerce, Industry and Banking, which earlier asked the government to slow down power tariff increases, will petition the prime minister to review the ERC’s decision before the new rate takes effect on Jan 1.

He said businesses want the government to delay consideration of Egat’s financial woes in order to reduce the power tariff from 5.69 baht per unit to 5.3 baht per unit.

“If the 5.69-baht rate is applied, electricity bills in the industrial sector will soar by 70% from around 3 baht in early 2021. This will severely affect us,” said Mr Isares.