On the surface, a pledge by the Paetongtarn Shinawatra government to cut electricity prices from 4.15 baht per kilowatt-hour to 3.99 baht for the next billing cycle starting May 1 seems like long-awaited good news.
The reduced rate aligns with the stance of her father, former Prime Minister Thaksin Shinawatra, who told voters during a local election campaign that electricity costs must be reduced. But the public cannot celebrate just yet.
In remarks following the April 1 cabinet meeting, the prime minister merely mentioned a cabinet resolution endorsing the Energy Ministry's proposed cut.
She said the new rate will not be subsidised -- yet it remains higher than the 3.70 baht per unit that Thaksin had earlier said was the appropriate rate.
She did not say how the government plans to implement the cut, leaving doubts lingering over whether this is just another empty promise.
The high cost of electricity has been a contentious issue for years. The debate goes beyond short-term relief, touching on the need for fundamental reform in how electricity prices are calculated.
Unlike other utility bills -- such as tap water, which reflects resource, operational, and tax costs -- Thailand's electricity bills include additional charges such as the availability payment (AP) and the fuel tariff (FT). These are a result of contractual obligations made by the Electricity Generating Authority of Thailand (EGAT) with private power plant concessionaires.
The FT reflects market-based fuel prices. When the price of natural gas rises, that cost is passed on to consumers. Currently, around 60% of Thailand's electricity is generated using natural gas supplied by PTT.
The AP is a form of incentive and price guarantee -- designed in the name of energy security -- to ensure power generators are ready to produce electricity. EGAT agrees to buy power from these producers even if it does not use it.
While the AP does help safeguard energy security, the lack of transparency makes it an unjustifiable burden on consumers. The core problem is EGAT has paid for a significant amount of unused electricity, largely because Thai policymakers have overestimated future electricity demand.
The Energy Regulatory Commission says the AP accounts for 16% of the electricity tariff, while fuel costs make up 60%. The commission adjusts the tariff every four months. The current rate of 4.15 baht per unit covers the period from January to April this year. Energy activists have long campaigned for a cut in the AP, or its removal. Over the past 17 years, the total cost of availability payments has exceeded 553 billion baht.
Nearly two years into the Pheu Thai-led coalition government's term, there is still no sign of any serious attempt to implement long-term, sustainable solutions to the electricity pricing crisis -- namely, restructuring the pricing model and removing availability payments from contracts. What the public sees instead is yet another electoral pledge to reduce utility bills, with no clarity on how the cash-strapped government intends to fund the promised price cut. Calls for structural reform and a transparent pricing system have received little meaningful response from policymakers.
Just like the Prayut Chan-o-cha administration, the Pheu Thai government has resorted to short-term subsidies -- a band-aid measure -- through EGAT to maintain the 4.15 baht rate. This has resulted in a massive and growing reimbursement bill for EGAT, which the government will ultimately cover using taxpayer money.
True reform requires sincerity and political will -- qualities that remain absent in this administration, including from Ms Paetongtarn herself. Take, for example, her muted response to calls by the People's Party for her to cancel the recent selection of developers for 3,600 megawatts (MW) of renewable electricity projects, citing irregularities in the selection process.
Opposition leader Natthaphong Ruengpanyawut pointed out the selection appeared to favour major energy firms. He called for the contracts to be revised, warning that if left unaddressed, the project would further burden consumers. Ms Paetongtarn has kept her distance from the controversy. When she addressed parliament during last month's no-confidence debate, the questionable project appeared to remain intact.
Much has been said about the need to lower electricity costs, but little meaningful action has been taken. Successive governments have shied away from tackling the flawed power contracts at the heart of the problem. At this point, consumers can only keep their fingers crossed and wait to see whether the April 1 pledge to lower electricity fees -- without subsidies -- turns out to be just another April Fool's joke.