Cabinet Approves Electricity Rate Cut to Ease Financial Burden
The Thai cabinet has approved a reduction in electricity prices, lowering the rate from 4.15 baht per kilowatt-hour (kWh) to 3.99 baht for the billing period from May 1 to August 31.
Prime Minister Paetongtarn Shinawatra announced the decision after Tuesday’s cabinet meeting, stating that the move aims to alleviate financial pressure on households and businesses. The 4% reduction was proposed by the Minister of Energy.
The cabinet agreed that power charges must not exceed 3.99 baht/kWh during this period, without requiring a state subsidy. However, the final decision rests with the Energy Regulatory Commission (ERC), which is expected to confirm the new rate later this month.
Push for Lower Power Prices
The Pheu Thai Party, which leads the coalition government, has been advocating for months to bring electricity prices below 4 baht per unit. However, energy regulators argue that lowering the rate further is challenging due to outstanding reimbursement obligations to the Electricity Generating Authority of Thailand (Egat), state energy company PTT, and gas shippers, who previously subsidized electricity costs.
In January, the ERC proposed a 0.17 baht per unit reduction if the government agreed to cut spending on renewable energy investment programs, which are partially funded by electricity tariffs.
Balancing Costs and Subsidy Repayments
Electricity prices in Thailand are reviewed every four months and adjusted based on fluctuating costs such as fuel prices, exchange rates, and other economic factors.
Last month, the ERC estimated that electricity rates for May-August could range between 4.15 and 5.16 baht per unit, depending on how much of the tariff is allocated for reimbursing Egat and other energy firms. The lower the electricity tariff, the longer Egat will take to settle its subsidy-related debts.
Long-Term Challenges in Cutting Costs
Former Prime Minister Thaksin Shinawatra, father of the current leader, recently stated that the government aims to lower electricity prices to around 2.70 baht per unit. However, he did not specify how this would be achieved.
One major challenge in reducing costs is that Egat is bound by long-term power purchase agreements with private generating companies. As a result, Thailand has an electricity surplus of approximately 30%, which is double the level considered necessary for most countries. This oversupply adds to the difficulty of lowering power prices further.
The final ERC announcement on the new electricity rate is expected later this month.
