The subcommittee on power rates, chaired by the Energy Ministry's deputy permanent secretary Norkhun Sithipong, yesterday also decided to pay outstanding debt of Bt5 billion to PTT during the period.

The new FT rate will be 68.42 satang per unit, which - when added into the base power rate of Bt2.24 - means power consumers will pay Bt2.93 per unit, down 1.68 per cent from the Bt2.98 charged during the previous four months.

"The FT could have been reduced as much as 15.99 satang per unit, but for the loan from PTT and the interest burden," Norkhun said.

From October 2005 to January 2006, PTT agreed to shore up electricity prices through natural-gas discounts worth Bt6 billion. The Electricity Generating Authority of Thailand (Egat) has to repay the principal of Bt4.99 billion, plus interest.

Norkhun said the subcommittee was of the opinion that the debt should be paid at one time.

Meanwhile, PTT has agreed to lower the interest on the loan from 6.77 per cent to 6 per cent, which means Egat needs to shoulder Bt81 million in interest.

If it had not been for the debt repayment, the FT could have been slashed as much as 15.99 satang per unit because of the strengthening of the baht against the US dollar - from Bt37 eight months ago to Bt35.25 over the past four months.

The stronger baht has reduced the prices that Egat pays to independent power producers as well as overseas generators.

It has also lowered fuel prices, with natural gas down by Bt15.52 to Bt189.39 per million British thermal units.

Norkhun also attributed the lower FT to reduced power consumption as well as the supply of coal-fired power from BLCP Power and hydropower from Laos. This has led to a reduction in consumption of bunker oil.

He added that the new FT had factored in the costs that all power generators will need to contribute to the Clean Energy Fund, which will start collecting remittances of 1.05 satang per unit on July 1. The fund, worth Bt472 million, is earmarked for development activities for communities located near power plants.

Norkhun said that for the October 2007-January 2008 period, the FT could be increased due to an expected increase in natural-gas prices. Every baht increase in the price will increase the FT by 0.6 satang per unit.

Viraphol Jirapraditkul, director-general of the Energy Policy and Planning Office, said that the subcommittee had agreed to pay back the PTT loan, due to the likelihood that the FT would definitely rise in the next round.