Energy Minister Pirapan Salirathavibhaga has proposed a reduction in electricity rates by nearly 0.40 baht per kilowatt-hour (unit) by modifying the utilization of Pool Gas, which would decrease the costs of generating power.
This proposed reduction is greater than the 0.17 baht per unit initially recommended by the Energy Regulatory Commission (ERC), which has stated that its suggestion could be implemented if the government reduces its financial support for promoting investments in renewable energy.
Mr. Pirapan expressed a preference for adjusting Pool Gas usage rather than adopting the ERC’s approach, citing potential legal issues with the latter.
Pool Gas represents the weighted average wellhead price of gas sourced from the Gulf of Thailand, the Malaysia-Thailand Joint Development Area, Myanmar, and imported liquefied natural gas (LNG).
Gas accounts for over 60% of the energy sources used in power generation within the country and is also utilized by local industries for manufacturing.
The cost of imported LNG, which often varies and is typically high, plays a significant role in driving up electricity costs.
According to Mr. Pirapan, better management of Pool Gas usage in both power generation and manufacturing could lead to a decrease in the power tariff, which determines the cost of electricity bills.
He did not provide specific details on how the adjustments would be implemented, but analysts believe that effective changes could enable electricity producers to purchase gas at lower rates than those paid by industrial entrepreneurs.
“We are working on Pool Gas management, hoping to reduce electricity prices in the next four-month cycle,” said Mr. Pirapan.
The ERC reviews and adjusts the power tariff quarterly. The current rate from January to April stands at 4.15 baht per unit.
“I believe we can reduce the power tariff to less than 4 baht a unit. We have to change and improve many parts of the country’s power price structure, especially Pool Gas,” he said.
The ERC has urged the government to consider cutting its investment in renewable energy promotion, which is currently supported through feed-in tariffs and adder tariffs granted to private power producers.
These costs, combined with other expenditures for energy-related state policies, make up 4% of the power tariff, as noted by energy officials.
Feed-in tariffs and adder tariffs are integral components of power purchase agreements with energy companies.
Mr. Pirapan noted that canceling these contract conditions, which are renewed automatically every five years, would be illegal and could result in legal challenges.
