ERC seeks budget claw-back to delay rise in electricity prices

The Energy Regulatory Commission (ERC) plans financial audits of the three power agencies in a quest to use any unspent budget to slow an increase in fuel tariffs.

A database of investment plans at the three agencies' power plants and other facilities has been built up in the past two years, and the ERC is now ready to study it one item at a time, said Direk Lavansiri, chairman of the commission.

"Unspent amounts will be clawed back, and this should help relieve the burden on the public from increasing fuel prices," he said at a recent group interview.

Under the current power pricing structure, future investment costs are factored into the price. However, in some cases the three agencies - the Electricity Generating Authority of Thailand (Egat), Metropolitan Electricity Authority (MEA) and Provincial Electricity Authority (PEA) - were not able to complete investment plans for which funds had already been supplied.

In 2011, the ERC clawed back some Bt7 billion from the three agencies.

Amid forecasts of continued tight fuel supply and demand, the price of crude oil is expected to remain above US$100 (Bt3,156) per barrel this year. This would also keep the price of natural gas, which accounts for nearly 70 per cent of the fuel used to generate electricity, at a high level, with a knock-on effect on electricity prices.

Direk conceded earlier this year that there is a high chance that electricity charges would go up in accordance with an increase in the price of natural gas. How much the charges will rise depends on foreign-exchange rates and government policy.

While a weakening baht could raise the cost, as about 90 per cent of energy consumed in Thailand is imported, the government's decision to have Egat shoulder the extra cost could delay the increases.

The government earlier ordered a freeze in the power tariff increase for the first four months of this year. Direk expected Egat to shoulder around Bt8 billion of the cost resulting from the decision.

Since the ERC took shape in 2008 and began setting power prices, "claw-backs" or Egat subsidies have been used to delay increases in charges.