The complaints were triggered as electricity charges rose 11.1% for the four-month period starting February to an average of 2.4541 baht per unit (measured in kilowatt-hours or kWh), driven by rising fuel costs and the weakened baht.

The price rise, 24.44 satang per unit, was the highest since Thai authorities allowed power tariffs to be adjusted more freely to reflect costs, especially for fuel, several years ago.

The steep increase was also meant to make up for costs arising from the previous cap on tariff rises, a politically-motivated move by the previous government led by Chuan Leekpai.

According to the National Energy Policy Office, the cost of natural gas, which generates about 60% of Thai electricity, surged 20% from October 2000 to January 2001, to 138.27 baht per one million BTU from 115.20 baht.

Fuel oil rose 66 satang to 7.36 baht a litre and diesel oil 1.05 baht to 10.73 baht a litre for the period.

Higher fuel costs increased the costs of the Electricity Generating Authority of Thailand (Egat), which supplies the bulk of power to the country, by 22.99 satang per kWh.

Consumer groups recalled the scrapping of the fuel adjustment clause, technically known as Ft which they suggest was intended to cover costs arising from the inefficiency of three state power utilities and associated perks for staff, including free power.

There has also been growing scepticism that the Electricity Generating Authority of Thailand (Egat) has paid more than it should have done for electricity purchased from private power producers.

Energy authorities blame the higher cost of natural gas for pushing up Ft charges, one of the three cost factors in the overall public power tariff structure.

Natural gas prices have actually gone up in line with the higher world oil prices but the impact has been ,aggravated by the baht's weakening against most major currencies especially the greenback, on which world oil prices are based. explained that higher power bills were also the result of greater consumption by the public, particularly for air-cooling, in the last hot season when day-time temperatures soared, to 38-40? centigrade.

A one-degree-celsius rise in outside temperatures results in a 10% increase in power requirements of air-conditioners and refrigerators they pointed out.

Indeed, the seasonal heatwave pushed Thailand's peak power demand to an all-time high on April 5. The new peak of 15,620.1 megawatts, registered at 2 pm, represented a 4.7% rise over last year's peak of 14,918.3 MW which took place on the same date of the month, according to Egat.

Siridat Glankwahmdee, Egat's deputy governor for transmission systems, attributed the jump in power usage largely to the soaring demand for air-conditioning.

In terms of energy requirements, the demand on April 5 was 321.15 gigawatt/hours (GWh), an increase of 4.31% from 307.90 GWh registered on the same day last year.

However, many consumers were not convinced. Fearing a public backlash, the Thaksin government has ordered a halt to a new increase in the Ft charge, which was supposed to come into effect in June, for a four-month period.

A recent opinion survey has found that many Bangkokians were unhappy with their electricity bills and suspect something fishy about the Ft charge calculation.

A survey of 1,160 residents conducted by Assumption University from May 28 to June 3, found that 50% of the respondents believed electricity bills were too high.

About 89% said explanations given by power generating agencies about fee collections were unclear. Some 62% believed there was a lack of transparency in the system of fixing power charges.

Chaturon Chaisaeng, a PM's Offlce minister in charge of energy affairs, subsequently set up a subcommittee to investigate the issues with the aim of curtailing electricity charges.

The subcommittee, chaired by Praiphol Khumsup, a Thammasat University economist, found one of the ways to reduce the tariff was to cut annual bonuses and welfare benefits granted to power agency employees which include the discounts on electricity fees.

The panel pointed out the discounts cost five billion baht a year and that amount is passed on to consumers in their power bills.

Egat was also urged to negotiate for a price cut in power purchases from independent power producers (IPPs).

Mr Praiphol said investment returns for most IPPs were as high as 19-20%. The panel said it was too steep and should be adjusted downward.

The panel also wanted IPPs to absorb some of the foreign exchange losses instead of passing it all onto consumers.

Naturally, labour unions of power agencies were up in arms, arguing the granting of discounts on electricity charges was offered as part employment terms applied decades ago.

They also claimed that the staff discounts on electricity fees had nothing to do with high electricity bills.

IPPs said the IPP power tariff was fair to both Egat and operators and the rates allow IPPs to match terms set by lenders whose loans contribute as much as three fourths of financing required by those projects.

Sarath Ratanawadi, managing director of Gulf Electric Co, argued that the investment returns stated by the panel were exaggerated and insisted the rates were only 15-16%.

Meanwhile, the Petroieum Authority of Thailand (PTT) has come under great pressure from politicians to negotiate the review of gas prices in the wake of growing criticism high gas prices that have public electricity charges.

The PTT has been obligated to amend terms of most of the gas purchasing contracts gas distribution monopoly wants g producers to reduce gas prices a minimum supply quantities to fall line with the slowdown in thecountry's gas demand and changing economic environment.

The PTT's previous effort launched about a year ago to seeh amendments, were far from successful.

Anon Sirisaengtaksin, deputy pre ident of PTT Gas, said some of the contracts were outdated and others based on unrealistic pricing indices. The supply volume contained the contracts exceeds demand with price heavily tied to the US dollar thus imposing excessive cost burden on the state oil and gas enterprise, he said.

Most of the existing supply contracts, including the gas from Yada field in Burma, have come under review for term amendment negotiations.

Gas producers in Thailand which have established gas sales with PTT include groups led by Unoc Chevron, and PTT Exploration & Production (PTTEP) which is an affiliate of PTT.

Against the PTT's forecast slower growth in gas demand because of the sluggish Thai economy, Mr Anon stated that the would be an oversupply of gas if changes were made to cut the minimum daily quantity commitments in the contracts with producers.

This matter is of great concern the PTT as there are "take-or-pay costs involved in those contract Such a clause requires the PTT to pay in full for the committed gas supply volume regardless of whether it is able to take full delivery or not.

The PTT did not elaborate on how much the excessive gas supply would be, nor would it touch on the forecast gas demands. But Unocal Thailand, the country's largest gas producer recently came up with projections of an average 7.5% per year growth in gas demand between 2000 and 2004. This is about 2,000 million cubic feet per day (MMcfd) in 2000 to 2,6 MMcfd in 2004.

Randy Howard, president of Unocal Thailand, has insisted that the company was unable to reduce the price of gas produced from its gas fields in the Gulf of Thailand, adding the price was fair and competitive.

Unocal Thailand, part of the California-based Unocal Corp, has moved to curtail annual capital spending on its extensive gas development in offshore Thailand due to the country's stagnant demand for its gas. The firm's five-year plan include the reduction of annual capital investment from a peak of US$3 million this year to $250 million in 2005. Capital investment for 2002 is $310 million, $280 million in 20 and $260 million in 2004. Capital investment last year was $242 million.

© The Post Publishing Public Co., Ltd. 2001
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