The cabinet on Tuesday approved a proposed reduction in the price of electricity from 4.15 baht per kilowatt hour to 3.99 baht for the billing period May 1 to Aug 31.
Prime Minister Paetongtarn Shinawatra said the intention was to reduce the financial burden on households and businesses. The reduction, approximately 4%, was proposed by the minister for energy.
The cabinet agreed that power charges must not exceed 3.99 baht/kWh, without a state subsidy, for the four-month period starting on May 1, she said after the weekly meeting.
The final decision rests with the Energy Regulatory Commission (ERC), which is expected to announce the new rate later this month.
The Pheu Thai Party, leader of the coalition, has been pushing for months for a reduction in the price of power to below the psychological level of 4 baht a unit.
However, energy regulators say they have only limited room to manoeuvre as part of the power tariff must be set aside to reimburse the Electricity Generating Authority of Thailand (Egat), the state energy company PTT and gas shippers for previously helping subsidise costs.
In January, the ERC said it was prepared to reduce the power charge by 0.17 baht per unit if the government agreed to reduce spending on programmes to promote investment in renewable energy. Some of those costs are funded by a portion of the power tariff.
Power bills are reviewed every four months and adjusted to take into account variable costs such as fuel, as well as the exchange rate and other factors.
The ERC said last month that rates for the May-August period could be anywhere between 4.15 and 5.16 baht per unit, depending on how much was to be set aside for reimbursing Egat and the others.
The lower the power tariff, the longer it would take Egat to clear its subsidy-related debts, the regulator said.
Former prime minister Thaksin Shinawatra said recently that the government headed by his daughter aimed to bring down the electricity tariff to about 2.70 baht per unit. He did not elaborate on how the cost could be lowered.
One big obstacle to cutting costs is that Egat is locked into long-term power-purchase agreements with generating companies. The result is that Thailand has an electricity surplus estimated at 30%, twice the level considered adequate for most countries.
