The Electricity Generating Authority of Thailand (Egat) expects the electricity tariff will hit five baht per kilowatt-hour (unit), on a par with Singapore, in two years due to the rising price of natural gas.
Egat governor Sutat Patmasiriwat pointed to imports of costly liquefied natural gas (LNG) as a major reason for the projected 35 per cent increase in the power tariff from an average of 3.7 baht per unit at present, including 3.2 baht as a base factor and 52.04 satang for the fuel tariff.
Using gas from domestic sources costs three baht per unit for power generation, compared to 5.5 baht for imported LNG. However, production of local gas has peaked and will decline, paving the way for imported LNG to play a larger role in power production.
Mr Sutat said Malaysia and Vietnam both reduced their dependency on gas and promote clean coal and nuclear power, both of which can generate electricity more cheaply than gas. Although the two countries have plentiful gas supplies, each use gas for less than 40 per cent of power generation.
Thailand relies on gas for up to 70 per cent of power generation, up from 60 per cent a decade ago.
Attempts to diversify fuels in power generation, from imported coal to nuclear power, have failed due mainly to protests from local communities and environmental activists.
The government plans to build 10 more electric train lines, and Egat estimates these will require 1,000 megawatts to operate, raising power demand.
Higher wages have also prompted labour-intensive industries to shift to machinery and robots, which will increase power consumption in the manufacturing sector.
Chen Namchaosiri, vice-chairman of the Federation of Thai Industries, said an electricity tariff of five baht per unit will force small and medium-sized enterprises to shut down their businesses or relocate to other countries such as Indonesia, Vietnam and Malaysia.
Businesses have overcome severe floods and the minimum wage hike, but a higher power tariff may just be too much, said Mr Chen.
He doubted if the government really wants greater use of automation if it is letting power costs exceed those of its neighbours.
Energy Minister Pongsak Raktapongpaisal said the fuel tariff will be increased by 50 satang each year in line with gas prices, which may lower the confidence of foreign investors in Thailand's competitiveness.
He said the ministry will accelerate talks with neighbouring countries to buy more electricity to cut dependence on gas, lest electricity costs double.
The ministry also plans to provide accurate information to the public about clean coal technology and Thailand's need to diversify fuels used for power generation.