Veeraphol Jirapraditkul, deputy director-general of the Energy Policy and Planning Office, said a subcommittee on power demand at its latest meeting concluded that growth in consumption would probably decline.

The group's forecast will be used as a benchmark for energy authorities to determine a power development plan.

"The new forecast is necessary given that there is an expectation the economy will expand by 5.5 per cent per annum, down from the previous forecast of 6.5," Veeraphol said.

Thailand's real gross domestic product growth slowed to 4.5 percent in 2005, compared to 6.1 percent in 2004, according to the World Bank.

The international body has projected 5 per cent growth for 2006.

Initially, the subcommittee estimated that if the economy slowed, electricity demand would too.

During the first three months of the year, demand for power expanded by five per cent from the same period last year, against a growth forecast of 7.8 per cent for the first quarter.

The final power demand forecast will be used to write a new power development plan, details of which will be incorporated in terms of reference for the second round of independent power producer (IPP) bidding, which should begin late this year.

"The IPP bidding is not an urgent matter. Power demand has expanded despite a reduced growth rate. Power reserves have risen from 13-15 per cent last year to 19 per cent," he said.

Under the IPP programme, the government awards new power plant projects to private companies, to reduce state investment. The private producers sell the electricity they generate to Egat.

Deputy energy permanent secretary Norkhun Sitthipong, chairman of the power demand forecast subcommittee, said the final forecast should be clearer on April 21.

"Then, the figures will become the benchmark for the IPP

terms of reference," he said.

The first round of IPP bidding took place in the early 1990s, following Egat's establishment of Electricity Generating Plc (Egco). The subsidiary, then wholly owned by Egat and now 25 per cent owned by the body, was the first independent power producer. It operated its own power plant and sold all of its output to Egat.

There are several unresolved issues regarding the IPP bidding.

It is still unclear whether Egco and Ratchaburi Electricity Generating Holdings, which is 45-per-cent owned by Egat, will be allowed to participate in the bidding.

The Electricity Regulatory Board earlier suggested that neither company should be allowed to join the bid, given that they are affiliated to Egat.

Egat will be allocated half of the new supply to hit the market without having to file a bid, which could possibly lead to allegations of unfairness from the rest of the industry if either company is allowed to make a bid.

Because Egat is resuming its role as state enterprise, the Electricity Regulatory Board will consider how to adjust power prices, Veeraphol said.

Egat's transformation into a publicly-traded company was nullified in March when the Supreme Administrative Court revoked two royal decrees that supported the transformation. Egat must now cancel the planned share sale.

The power structure is now established based on Egat's return on investment capital. To make Egat attractive to investors when it was about to float shares on the stock market, the energy authorities set the return on investment capital for Egat at 8.4 per cent.

Veeraphol said Egat's renewed status as a state enterprise meant power prices could be adjusted in line with its financial ratio or debt-to-equity ratio, as was done in the past.

"Initially, the change in the calculation could lead to a drop in power prices," he said.