The cabinet decision to guarantee a huge loan to be taken out by the Electricity Generating Authority of Thailand (Egat) to ease the effect of the higher fuel tariff (Ft) seems a bad idea.
The nod to the required loan means there will be no answer to dealing with the lack of transparency in Ft policy.
Egat said it needs 85 billion baht to maintain liquidity while managing the Ft, a key element in the power tariff for calculating electricity bills.
The agency, which made a profit this year of 374 billion baht, said recently it had spent close to 100 billion baht subsidising the Ft, which is determined by fuel prices, since late last year. The Ft is reviewed every four months.
After allowing Egat to increase the tariff in May, resulting in a substantial rise in electricity bills of four baht per kilowatt-hour (unit), the government put the brakes on Egat's plan to raise the tariff for Sept-Dec to 4.4 baht per unit, based on the high fuel tariff.
To justify the need to increase the Ft, Egat, as well as the Energy Ministry and the Energy Regulatory Commission (ERC), blamed the Ukraine-Russia war-driven rise in oil prices and particularly liquefied natural gas (LNG), that accounts for 60% of the fuels used to produce electricity in the country.
During the no-confidence debate in July, Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow tried to justify the planned Ft hike, insisting the rate had not been increased for years.
However, there is a bigger issue that the minister hardly touches on -- why does the public have to take on the Ft burden?
There have been unanswered questions related to the Ft policy since contentious power purchase contracts were signed, and flawed national energy development plans adopted.
Over the years, civic groups have criticised the government and the Energy Ministry for the huge surplus of reserve power generation capacity, more than 45% as opposed to the standard reserve margin for the sake of energy security which stands at about 15-18% of peak demand.
The surplus hit 50%, which is equivalent to electricity from a dozen power plants, in 2020 as Covid-19 hit its peak.
The problem is the power purchase contracts are written to incentivise energy firms to invest in pricey energy projects by guaranteeing to pay for every unit of electricity, including energy that is unused.
That contract ensures a continual energy supply, but passes on a big burden hidden in the Ft structure to unsuspecting consumers.
Worse, despite doubts about the Ft, Egat keeps entering into new energy deals with the private sector.
For instance, it continues its shopping spree in purchasing electricity from the controversial Xayaburi dam in Laos which began operating in 2019.
The Thai government is also planning to import electricity from Laos' Luang Prabang Dam, Pak Beng Dam and the Pak Lay hydroelectric plant.
The 85-billion-baht loan will enable Egat to subsidise the unjust fuel tariff for quite some time.
But consumers should be made aware that without Ft transparency, the agency is likely to pass on the burden to them sooner rather than later, just as it has done before.
They need to confront the government and Egat on such a crucial matter, ensuring that they both come clean.
