Energy price challenge
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Energy price challenge

Evidently well aware of public disapproval of his cabinet line-up and that there is no honeymoon period, Prime Minister Srettha Thavisin has prioritised energy price reduction out of the hope for greater popularity.

On Wednesday, Mr Srettha pledged his administration would reduce energy prices once it starts work, saying "people will not have long to wait after [cabinet's] first meeting".

Mr Srettha's new cabinet still has to be formally announced and sworn into office before His Majesty the King.

The government is scheduled to declare its policy before parliament on Sept 8.

While focusing on expensive energy prices seems the right move, this is a big challenge for the new administration.

Energy prices were a major reason for the Prayut Chan-o-cha government's decline.

The Prayut administration merely applied band-aid solutions rather than get to the bottom of the problem. Take, for example, the failure in electricity price controls resulting from a distorted electricity price structure.

The Ministry of Energy, then under Supattanapong Punmeechaow of the United Thai Nation (UTN) Party, tended to blame the rise in the cost of liquefied petroleum gas (LPG), which is the main power source for generating electricity.

The ministry said LPG accounts for 60% of power generated, which made it impossible to lower electricity costs, especially given the strains of the pandemic and the Russia-Ukraine conflict. But LPG is just part of the problem.

The ministry has also been evasive about unfair contracts with energy producers, especially in relation to availability payment (AP) costs, a controversial financial payment guarantee paid to energy producers even if they do not operate.

In principle, AP was created as a guaranteed incentive for energy investors to build projects so the country would be spared from long-term power shortages.

But without accountability and public scrutiny, it is massively abused, resulting in excessive energy reserves.

The AP payment is passed on to consumers through the Ft or fuel tariff, which is adjusted every four months.

Attempts to elevate Ft costs over the past years have triggered public anger, and all the Prayut administration could do was use a price subsidy instead of rectifying the contract agreement.

The price subsidy from September 2021 to April this year saw the government paying 135 billion baht to the Electricity Generating Authority of Thailand (Egat).

On Aug 3, Egat said it could not yield to any further requests for cheaper electricity bills in the next four-month cycle, suggesting a rise in Ft, now 4.7 baht per kilowatt-hour (unit), for households is inevitable.

The Egat stand raises questions about how the prime minister will lower the fee.

It will be interesting to see how the new energy minister, Pirapan Salirathavibhaga, also from UTN, will proceed with this tough assignment despite the party's past failures.

The government needs to make bold decisions and take positive action, and as part of that, it needs to overhaul the energy sector and crucial mechanisms like the ERC to ensure a fair and transparent energy price structure.

If the UTN cannot fulfil its task, like in the past, Mr Srettha must not wait and give it a second chance.

Editorial

Bangkok Post editorial column

These editorials represent Bangkok Post thoughts about current issues and situations.

Email : anchaleek@bangkokpost.co.th

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