Thailand: New power rate calculation by 2018

Thailand: New power rate calculation by 2018

A new calculation for the power rate, relying on new base factors to be
applied for the next five years (2018-22), is due to be concluded and
announced by early next year.

The new base factors and calculation are expected to let the new power rate
reflect real development costs and changes in power-generation structure.

Veeraphol Jirapraditkul, a commissioner and spokesman of the Energy
Regulatory Commission (ERC), said Thailand has been relying on several
factors to produce power for consumers, but these have changed and the ERC
has revised its rate calculation accordingly.

The base factors normally stem from capital expenditures for
power-generating systems, transmission and distribution, mostly involving
fossil fuel-based power.

The ERC recently assigned PricewaterhouseCoopers to conduct a study of the
feasibility of calculating power rates differently in each region, taking
into account varying costs. The results of the study are expected by the end
of 2018's first quarter.

The existing power rate applied to Thai consumers is an averaged single
rate, though power-development costs in some regions are higher than in
others.

The new power rate will not be applied immediately after the study is done,
however, since the findings will need to pass hearings by relevant
organisations before being imposed, Mr Veeraphol said.

He said the location of power users will be another new factor added to the
power rate calculation. The greater the distance between power plants and
users, the higher the power cost to be charged, since the state must bear
the expense of the transmission lines.

The changes will make the new power rate fairer for everyone, Mr Veeraphol
said.

Excessive power reserves are another base factor that the ERC will examine
in calculating power bills.

Thai power reserves are expected to rise to more than 30% of total
power-generating capacity over the next five years, more than doubling a
World Bank forecast.

Previously, energy policymakers planned on power-generating capacity rising
in line with the country's economic growth.

But unexpected political and economic turbulence over the past several years
dragged down growth, resulting in power reserves outpacing their target.

Excessive power reserves means increased generating costs that have to be
absorbed by consumers.

Another factor to be revised in the new power bill calculation is the rising
power-generating capacity of renewables, whose power-generating costs were
historically higher than those of fossil fuel-based power.

Renewable power makes up about 13% of Thailand's total power-generating
capacity, up sharply in the past few years with the benefit of government
support.

Solar power ranks as the most popular type of renewable power in Thailand.
Solar-generating capacity rose to almost 3,000 megawatts in July from 900MW
in 2014.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1326835/new-power-rate-calculation-
by-2018

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com