Power tariff expected to hit record high

Power tariff expected to hit record high

The upsurge in global oil prices following the Russia-Ukraine war is expected to cause the power tariff, used to calculate electricity bills, to rise to a record high above 4 baht per kilowatt-hour (unit) for the first time, says the Energy Regulatory Commission (ERC).

The new rate was discussed by energy officials when the ERC examined the impact of higher energy prices on the power tariff, which is made up of the base tariff and fuel tariff, or Ft.

While the Ft is mainly determined by fuel costs, the base tariff refers to the costs for power plants and distribution systems and is revised every 5-6 years in line with investment in the power industry and the business outlook.

Officials adjust the Ft every four months, basing their calculation on foreign exchange rates, power consumption and fuel costs.

"We are facing a double impact from higher energy prices -- one caused by higher energy demand following the reopening of countries after lockdown, and the other resulting from the Russia-Ukraine war," said Khomgrich Tantravanich, secretary-general of the ERC.

Under current conditions, the Ft would stand at 0.2477 baht per unit on top of an average base tariff of 3.76 baht per unit between May and August this year, according to the ERC.

The Ft will increase to 0.6483 baht per unit between September and December, said the regulator.

Thailand's highest power tariff was recorded in 2014 when it rose to 3.96 baht per unit as a result of a global oil price surge to more than US$110 a barrel from 2012 to early 2014.

Oil prices eased a few months later.

Higher natural gas prices also cause the Ft to increase because the gas pool, or gas supplied from the Gulf of Thailand, Myanmar and the Malaysia-Thailand Joint Development Area, as well as more expensive liquefied natural gas (LNG) imports, make up 55-60% of the fuel used in electricity generation in Thailand.

The gas pool price is expected to rise to 386 baht per million British thermal units (BTU), up from 340 baht per million BTU early this year. The price of LNG imports in the spot market is expected to increase to 780 baht per million BTU, up from 450 baht per million BTU in January last year.

Mr Khomgrich said if more oil is used in place of gas, the Ft could be reduced by 0.13 baht.

Another solution is to buy an additional 370 million units of electricity produced by biomass power plants, he said.

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