PM rejects electricity tariff hike proposal
Prime Minister Srettha Thavisin rejected the electricity tariff hike approved by the Energy Regulatory Commission (ERC) on Saturday (December 2), explaining that he was worried the increase would be too burdensome for consumers.
Most of the general public are currently facing rising cost of living. Srettha added that the increase could hurt the government's popularity in the next general election.
The ERC earlier approved a 12.5% increase in the electricity tariff for residential consumers, from 4.20 baht to 4.68 baht per unit.
The ERC is expected to meet again in January to discuss the government’s decision. It is unclear whether the commission will agree to suspend the increase or if it will propose a smaller hike.
The Energy Ministry’s spokesman, Pongpol Yodmuangcharoen, said the ERC had based its decision on the need to offset losses borne by the Electricity Generating Authority of Thailand (EGAT) and thus allow it to service its debts. He said that the ministry would work with the ERC to find a way to reduce the impact of the tariff hike on consumers.
Deputy Prime Minister and Energy Minister, Peeraphan Salirathvipak noted that the tariff hike was necessary to cover the rising cost of fuel, which has been driven up by the war in Ukraine. He said that the ministry was working to reduce the country’s reliance on imported natural gas and to promote the use of renewable energy.
The ministry is currently considering four possible solutions to reduce the impact of the tariff hike:
1. PTT Plc could reduce the price of natural gas, which would be passed on to consumers.
2. The government could regulate the price of natural gas sold to both power plants and petrochemical companies.
3. EGAT could absorb the cost of the tariff hike for consumers.
4. The government could provide subsidies to consumers to offset the cost of the tariff hike.
If the tariff hike is implemented, it would mean that EGAT would be selling electricity below cost. This would increase EGAT's current debt burden and likely lead to financial problems for the company.
Consumers would also be affected by the tariff hike. They would have to pay more for electricity, which could put an added strain on their budgets.
The government’s decision to reject the tariff hike may benefit consumers, but how the government can minimise the adverse impact of the tariff hike remains unclear.
