Energy Regulator Backs Government Plan to Renegotiate Power Purchase Contracts with Adder-FiT Producers to Reduce Electricity Costs Fairly
Thailand's energy regulator backs a government plan to renegotiate power contracts with renewable energy producers to lower electricity costs, which currently burden consumers with 13-17 satang excess per unit annually. The Energy Regulator
The Energy Regulatory Commission (ERC) is supporting government efforts to review and modify power purchase agreements with Adder and FiT electricity producers to achieve genuine reductions in electricity costs and ensure fairness for all parties. ERC Secretary General Poolpat Leesombati revealed that the commission is ready to provide full data and legal support following Prime Minister's Order 137/2569, which established a committee to address problems arising from private power producer contracts. This will serve as a mechanism to genuinely reduce electricity costs and create fairness for all stakeholders.
Previously, the ERC proposed to the National Energy Policy Committee that purchase prices for Adder and FiT power plants should be revised. These are perpetual contracts where historical production costs and purchase prices no longer align with current conditions, where production costs have dropped significantly but purchase prices remain unchanged. This forces consumers to bear excess electricity costs of approximately 13-17 satang per unit, or conversely, allows operators to receive returns at high levels, totaling tens of millions of baht annually depending on yearly electricity production volumes.
The previous government under General Prayut Chan-o-cha received the ERC's proposal for consideration, though legal and contractual issues remain relevant. The ERC therefore recommends reviewing the matter under the Energy Industry Act B.E. 2550, specifically Section 65(1), which requires electricity rates to reflect actual costs, and Section 65(4), which requires rates to be fair to both energy users and operators. "The key consideration is whether contract conditions violate legal provisions. If it is determined that contract conditions are inconsistent with legal provisions, consideration must be given to whether legal principles take precedence over contract terms."
The committee comprises Deputy Prime Minister Pakaorn Nilpraband as chair and the Energy Minister as vice-chair, along with representatives from key agencies in energy, law, economics, and consumer protection, including the ERC Secretary General. The committee's primary responsibility is to establish guidelines for resolving issues with private power producer contracts that may not align with current circumstances and fairness principles, particularly regarding availability payments (AP) and energy payments (EP), to ensure compliance with legal standards, fairness to all contracting parties, and help manage the long-term electricity cost burden on the public. This committee represents an important mechanism for reviewing the country's energy cost management approach to make it appropriate to current conditions while protecting the public from excessive electricity costs.
