Governance issues in the Thai Electricity Sector WRI/TEI Workshop on Electricity Governance in Asia Chuenchom & Chris Greacen Palang Thai: 3 December 2003

Outline Brief history of Thai electricity sector Story #1: Bo Nok & Hin Krud: NGOs, strategic alliances, and two coal fired power plants Story #2: “National Champion” model –Structure –Governance issues Story #3: Access to the grid for small renewable energy generators: law vs. practice

Brief history of Thai electricity sector : Centralized, state-owned utilities –Metropolitan Electricity Authority (MEA) –Provincial Electricity Authority (PEA) –Electricity Generating Authority of Thailand (EGAT) : Private capital and market based reform –Giving “concessions” to private power producers (IPPs, SPPs) to generate & sell power –Sale of EGAT’s assets: EGCO, Ratchaburi –Plan to create “Power Pool” Break up / privatize the 3 utilities Bidding & Market clearing price for electricity

Story #1: Successful opposition to Bo Nok & Hin Krud Bo Nok, Hin Krud = planned large coal IPPs First case NGO challenge government energy policy on technical basis: –reliability criteria –demand projection –investment planning 3-hour televised debate NGO vs. Government –NGO: “Project not needed because of supply glut, canceling would be cheaper” Ultimate success: Coal projects cancelled  Access to info  Participation Access to justice  Capacity building

Bo Nok & Hin Krud Governance issues Success due in part to uneasy strategic alliance with EGAT & PTT NGO capacity building –Technical analytical capacity –However, access to information remains limited/unsustainable  Access to info  Participation Access to justice  Capacity building

Story #2: “National champion” “National Champion” = large partially privatized, self-regulated Thai monopoly with capital to invest abroad in competition w/ other transnationals EGAT to be the regional hub of ASEAN Grid Privatization timeline kept – EGAT listed and partially (<30%) sold in Stock Exchange of Thailand by March MEA, PEA will follow –EGAT market capitalization: 500 billion baht (US$12.5 billion) Access to info  Participation  Access to justice Capacity building

“National Champion”: governance issues No independent regulatory body Ability to assume both private & public identity as convenient Ability to pass on cost & risk to captive consumers If like PTT, then rapid sell-out of stock followed by commodity price rise. –PTT “public offering” = shares for 2000 people (0.003% of Thai population) Limited public hearing process Listing in stock market said to lead to “good governance” but applies only to narrow accounting criteria & financial management Access to info  Participation  Access to justice Capacity building

Story #3: Access to the grid for small renewable energy generators law vs. practice 2002 Cabinet approved VSPP laws passed allowing grid interconnection of renewable energy <1 MW. –English & Thai regulationas available at: After they were approved… PEA removed one key page –Page specified that expensive “block reclose” device NOT necessary –No technical/engineering reason offered Access to info Participation  Access to justice Capacity building

Key preliminary governance challenge Needed: Independent, empowered regulator  Access to info  Participation  Access to justice  Capacity building