Companies baulk at funding free electricity for low-income families

The private sector yesterday cried foul over the move to stick big companies with the cost of providing free electricity to low-income households.

"If the government wants to launch a 'welfare' or 'populist' policy, it should thoroughly weigh the pros and cons," said Chen Namchaisiri, vice chairman of the Federation of Thai Industries (FTI).

Industrial users oppose the proposal as it will increase their operating costs and blunt their competitiveness, he said.

According to the proposal of the Energy Regulatory Commission (ERC), which would be presented to the National Energy Policy Committee next Wednesday, large users like industrial plants, office buildings and shopping malls that consume over 400 kilowatt hours per month could be held responsible for contributing Bt12 billion per year to finance the scheme.

The subsidy had been expected to come from the government budget.

The Finance Ministry is now tasked with shouldering huge social costs. It could lose Bt45 billion this fiscal year after agreeing to exempt diesel from excise and value-added taxes starting next month. Thanks to a brief drop in oil prices, the diesel subsidy shouldered by the Oil Fund was cut yesterday by 40 satang to Bt6 per litre.

ERC member Pallapa Ruangrong said the commission will limit the number of low-income households eligible for free electricity to 7.9 million nationwide, by requiring them to have only 5-Ampare meters and consume less than 90 units per month.

Industrial plants have become a target of criticism for being power hungry. They should bear the brunt of electricity costs, since they account for nearly half of power consumption, activists say.

Thailand needs massive investment in new power plants, including controversial nuclear power plants, mostly to satisfy the demands of these big operators, they say.

If the National Energy Policy Committee, chaired by Prime Minister Abhisit Vejjajiva, approves the formula, it would be put into effect in June.

The proposal is part of "Thailand's power tariff framework for 2011-2015", which recommends the segregation of fuel costs, to educate consumers on the cost of generating electricity.

The ERC will soon announce the fuel tariff for the May-August period, which tends to rise along with oil prices. To help absorb the burden, the three state enterprises involved in electricity generation and distribution will be required to return a Bt9 billion sum set aside for their investment projects planned for 2009-2010. The ERC estimates that this could reduce the power base rate by 8 satang per unit.

Direk Lawansiri, chairman of the ERC, said there was no political pressure to delay the increase in the fuel tariff for this round, in connection with the expected election. If there were any, there would need to be a plan to cope with the missed revenue. When the oil price spiked in 2008, the Electricity Generating Authority of Thailand shouldered the cost of about Bt20 billion incurred by the price cap. It


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