The Energy Regulatory Commission (ERC) has approved a cut in the fuel tariff (Ft) by 0.0289 baht per kilowatt-hour (unit), reducing power bills to the lowest rate in two years.
ERC secretary-general Khomgrich Tantravanich said on Wednesday the new Ft rate will reduce the average power tariff, which is used to calculate monthly electricity bills, to 3.57 baht per unit during January to April next year.
The Ft is usually adjusted every four months. Its latest cut, the first deduction in three years since September 2017, will decrease Ft to 0.1911 baht per unit.
ERC has almost 7.2 billion baht left from its Ft rate management this year, so it can proceed with the rate reduction early next year.
The new rate has been approved though mainstream fuel prices for power generation are expected to increase, including a 2.5% rise in both natural gas and fuel oil and an 18% increase in diesel.
If the global economy picks up next year, prices of liquefied natural gas and oil will also increase. This will cause the ERC to cap Ft at an appropriate rate.
Ft is one of two key elements in the power tariff. The other is base factor which currently stands at 3.76 baht per unit.
Officials are also dealing with the high rate of base tariff.
Mr Khomgrich said the ERC estimates demand for on-grid electricity this year will shrink by 3.8% from last year to 179 billion units due mainly to the global economic recession which stems from the Covid-19 pandemic.
It also estimates demand for electricity next year to drop by 5% from 2019 levels as uncertainty about the outbreak will likely be prolonged.
Mr Khomgrich said the ERC is also studying how to further reduce power bills through better management of the return on invested capital (ROIC) in the state grid business.
ROIC reflects how effectively an organisation spends its invested capital to make a profit.
If the Electricity Generating Authority of Thailand, together with the state power distribution arms — the Metropolitan Electricity Authority and the Provincial Electricity Authority — can better manage ROIC, they will have more cash to offer discounted power bills.
The revision of ROIC will be finalised early next year, said Mr Khomgrich.