Call for end to Egat’s monopoly position

Economy August 03, 2016 01:00

By PICHAYA CHANGSORN
THE NATION

THE GOVERNMENT should dismantle the monopoly held by the Electricity Generating Authority of Thailand (Egat), PTT chairman Piyasvasti Amranand suggested yesterday.



While the oil and natural gas sectors have been deregulated, the former energy minister said the Thai power sector was “the most monopolised”.

“It should be opened up for competition to allow consumers to have choices of who to buy from, and for [other power] producers to have choices of who to sell to,” he said.

“This will enhance efficiency and also solve the problem of transmission constraints faced by renewable-energy producers,” he added.

Piyasvasti recommended that the government undertake a sweeping reform of the structure of the power industry by establishing an “independent system operator”, which could either be combined with or run separately from the power-transmission grid, which should be spun off from Egat.

A power market or other mechanism should also be created to open up a venue for power producers to sell their electricity to consumers, thus abandoning the single-buyer role of Egat, he said.

The government should also set electricity tariffs to reflect their true costs, and remove regulations and other obstacles, as both moves would help more renewable-power projects to be developed, he suggested.

Piyasvasti also commented that in recent years the government had become more rigid with its goals and plans, instead of letting the market mechanism work.

The Energy Regulatory Commission, for instance, should have organised competitive bidding for solar-farm project developers to submit their lowest electricity price offers, instead of setting a high power-purchase price and selecting them through a lucky draw, he said.

Chom Sangarasri Greacen, an independent energy specialist, said that while renewable-energy costs had fallen significantly and become competitive with those for fossil fuels, Thailand had ceased to add new solar-power capacities to the system so far this year.

One reason for this is the obligations that Egat has already committed to in terms of buying from large power projects in Thailand and from neighbouring countries, which means its reserve margin will soar to 30-40 per cent of installed capacity over the next 10 years, she said.

Moreover, the current setting of national electricity tariffs based on Egat’s return on invested capital, which in effect provides a guaranteed profit to the state power monopoly, has also helped create an overcapacity problem, since the more it invests, the more profits it will get, she explained.

Chom also claimed there was a “conflict of interest” issue in the Thai power sector, because government officials sit on a board to consider power-purchase deals from neighbouring countries, while at the same time many of them are also on the boards of Egat’s privatised subsidiaries – Ratchaburi Electricity Generating Holding, and Electricity Generating – which have won many of these deals.