Energy Regulatory Commission (ERC) approved the decrease of Ft surcharge of May-August 2016 of 28.49 satang/unit to stand at -33.29 satang/unit because of lower costs of fuel and government expenditure due to the delay of commercial operational date (COD) of renewable energy independent power producers in Adder and FiT category.

          Mr. Viraphol Jirapraditkul, ERC Commissioner, serving as the Spokesperson of ERC said that ERC agreed to decrease Ft surcharge of May-August 2016 period by 28.49 satang/unit to -33.29 satang/unit (Ft in January-April 2016 period was -4.80 satang/unit). The main factors were the cost of fuel for power generation, especially natural gas, that fell in line with fuel oil average price during 6-18 months which decreased beforehand as well as the delay of COD and contract cancellation of some renewable energy independent power producers, causing the government expenditure to subsidize renewable energy in the category of Adder and FiT lower than expected.

          The ERC spokesperson also summarized the other factors that had an impact on fuel price and generation cost from May to August 2016 as follows:

          1) Thai baht is stronger by 0.33 baht/ US dollar. The exchange rate during March 1-24, 2016 which is 35.38 baht/US dollar is used for Ft surcharge calculation.

          2) The electricity demand during May-August 2016 is expected to increase to reach 65,951 million units, an increase from January-April 2016 of 60,807 million units or 8.46 percent

          3) The share of natural gas use to generate power during May-August 2016 is still dominant at 64.22 % followed by power purchase from Laos and Malaysia 12.33 percent, lignite 8.28%, and imported coal 7.68%.

          4) Natural gas price is expected to drop by 26.25 baht/million BTU to 234.94 baht/million BTU because of the recent lower price of oil in the world market and will remain low for a while. The fuel oil price will be 11.94 baht/liter, an increase of 0.09 baht/liter, while diesel oil will be 16.03 baht/liter, a decrease of 3.33 baht/liter. The average price of coal imported by independent power producers is expected to be 2,842.47 baht/ton, a decrease of 23.09 baht/ton, whereas lignite price remains at 693 baht/ton. This leads to the cost of fuels and power purchase to be -16.48 satang/unit.

          Moreover, expenditure to subsidize power producers of renewable energy according to government policy namely Adder and FiT during May-August 2016 is lower than expected as many SPPs and VSPPs delay their COD. It leads to the decrease of Ft surcharge by 6.16 satang/unit. Expenditure for power development fund also falls by 0.03 satang/unit. It makes Ft surcharge during May-August 2016 period to be -22.67 satang/unit.

          5) From the Ft calculation adjustment during January-April 2016, there is the difference between the new Ft surcharge and Accumulate Factor at -12,512 million baht or -20.81 satang/unit because of the lower cost of fuel, stronger Thai baht, and power demand in February 2016 that was lower than expectation. The cost of fuel and power purchase is lower than the previous plan of 11.49 satang/unit. Renewable energy projects’ COD are postponed, while many SPPs stop their operation for maintenance, leading to the lower subsidy of Adder and Fit than expected by 9.30 satang/unit. The amount of money handed to Power Development Fund decreased by 0.02 satang/unit.

          From the mentioned factors, Ft surcharge of May-August 2016 calculated by EGAT is -43.48 satang/unit, a decrease from January-April 2016 of -38.68 satang/unit. ERC has also expected and calculated Ft of September-December 2016 to be -22.51 satang/unit, an increase from the expected May-August 2016 Ft surcharge by 20.97 satang/unit, which contributes to great fluctuation of Ft because of the factors in January-April 2016. To avoid great fluctuation of Ft surcharge of September-December 2016 and impact on electricity users, ERC takes the average of FT surcharges of May-August 2016 and September-December 2016 which is -33.29 satang/unit for electricity bill from May to August 2016.

          Ft surcharge of 33.29 satang/unit during May-August, a decrease of 28.49 satang/unit contributes to the average electricity price for every kind of customers at 3.4227 baht/unit (excluding tax) or 7.68 percent. ERC has publicized the new Ft surcharge on the website for public hearing from April 20 to May 4, 2016. The feedback will be considered before the electricity distributors put the new FT surcharge on electricity bills.