Villagers from Bor Nok district, Prachuap Khiri Khan, stage a surprise rally in Bangkok to oppose coal-fired power plants. The villagers turned up at a forum on national energy policy and demanded seats at the table.

For the 12-month period ending on Sept 30, combined generation requirements were up 6.35% year-on-year to a record 102,929.57 gigawatt/hours (GWh).

At the same time, peak power demand set a record on April 23 of 16,126.40 megawatts (MW), 8.10% above the previous high, and 5.4% above the forecast by the Electricity Generating Authority of Thailand (Egat).

Egat officials said that temperatures on some days ranged from three to five degrees Celsius higher than the previous year, especially in April, the country's hottest month. A study indicates that a 1C rise in temperature increases power consumption of air-conditioners by 10%.

Meanwhile, sales of new air-conditioners rose by 10% year-on-year during the hot season.

Egat figures showed power consumption by residential consumers led the growth table over all other categories, rising 11.64% in the period, followed by 10.21% in the small general service group, 8% in the large general service segment and 6.53% in the medium general service group.

Temperatures aside, the figures seemed to indicate that the country was emerging from its economic slump, as energy consumption tends to be closely linked to overall economic growth.

As of September, the country's total generating capacity was 22,034.80 MW, a slight decline of 1.05%, due to the retirement of some Egat power plants.

The state power utility remained the largest source of power generation with 15,000.4 MW, or 68% of total capacity.

Egat's generating capacity in fact dropped by 2,039.20 MW, or 11.97%, in the period. Private power producers stepped up their role, raising capacity by 1,805 MW, or 34.52%, to 7,034.40 MW.

Egat's power sales grew 7.41% in the fiscal year to 97,394 GWh, of which 60,404 went to the Provincial Electricity Authority (up 7.53%) and 35,209 GWh to the Metropolitan Electricity Authority.

Tariffs see-saw: Power charges moved up and down by a small margin in the period under review as authorities tightly regulated rates.

The rates were first raised by an average of 1.1% for the four-month period beginning in June, mainly in response to higher fuel costs amid protests from local consumer groups.

The increase, 2.69 satang per kilowatt-hour, was applied to the fuel adjustment factor, technically known as Ft, one of the three elements in the local power tariff structure. The total Ft charge for the period was 27.13 satang per kWh.

The increase did not sit well with the public, coming days after the discovery of power bill foul-up by the Metropolitan Electricity Authority. MEA governor Yongyuth Sricharoen admitted that 2.2 million households had been affected by a miscalculation in April.

Then in October, the average electricity tariff for the four-month period ending in January 2002 fell by 2% from the previous period to 2.43 baht per kWh). The reduction was spurred by a decrease of 4.36 satang in the Ft charge, to 22.77 satang per kWh. The saving was achieved after the three state power utilities cut their investment budgets for fiscal 2002-03 by 55 billion baht.

Power reform in the doldrums: Attempts to reform Thailand's electricity supply system have been losing momentum, however, with all indicators pointing to a delay of full deregulation by about one year to the end of 2004 or early 2005.

Meeting the original schedule of late 2003 now appears impossible as the enactment of legislation supporting power deregulation will be very time-consuming.

At the same time, a lack of enthusiasm for the reforms as currently envisioned has been shown by Chaturon Chaisaeng, the Prime Minister's Office minister in charge of energy policy.

Mr Chaturon has expressed strong reservations about the plan on four points: the sufficiency of power supply, adequate levels of competition among suppliers, subsidies for rural consumers, and appropriateness of power tariffs.

The California power crisis earlier this year fuelled further scepticism about the merits of introducing a power pool in Thailand among some Thai cabinet members including Mr Chaturon.

Deregulation of the power industry failed to move at a lightning pace in 2001. About 1,000 villagers from Ban Krut in Bang Saphan district of Prachuap Khiri Khan marched along Ratchadamnoen Avenue in Bangkok, protesting against the planned construction of lignite-fired plants.

Egat officials also oppose the power-pool concept and have drafted a new model that they say is less risky. It would basically allow power users to purchase electricity directly from producers and/or their marketing arms, at agreed prices plus wheeling charges. "Wheeling" is industry jargon for moving power across a transmission or distribution system.

Egat envisions an independent system operator to regulate supply and trading systems as well as wheeling charges under a model that would completely do away with the pool pattern.

The Egat-backed approach would be partly similar to what currently applies in Thailand, with the big difference being that consumers would not be limited to dealing with the two state distribution monopolies, the MEA and PEA.

"The power pool mechanism is too risky and too expensive for Thailand," said a senior Egat official, citing the higher exposure to California-style power shortage and disruptions, as well as higher electricity charges under a pool-operated system.

Egat officials contend that the power pool, as championed by the National Energy Policy Office (Nepo), should be deferred until key factors supporting competition in a deregulated market are in place, probably later in this decade.

Among other things, they said the number of power producers competing for sales in the proposed pool would be too small to ensure healthy competition but would lead to collusion in fixing prices, which inevitably would be too high.

Changes to coal power projects: The uncertain fate of two large coal-fired power stations planned for Prachuap Khiri Khan is causing further headaches for energy policymakers. The Thaksin Shinawatra government is still scratching its head over how to resolve long-standing environmental controversies, while the shareholdings in the two sponsoring companies have been restructured.

Union Power Development Co (UPDC), the sponsor of the Hin Krut plant, in November brought on board Hong Kong Electric Ltd (HKE), which acquired a 26% stake in the troubled venture. Union Energy of Thailand, a division of the Thai industrial group Saha Union and one of the original UPDC shareholders, also raised its holding to 15% from 10%.

The arrival of HKE filled the vacuum left by Fortum Group of Finland and US-based Consolidated Electric Power Asia (Cepa) which had earlier shed their interests of 28% each in UPDC. Before HKE came on board, two Japanese investors _ Chubu Electric Power Co and Toyota Tsusho Corp _ had each acquired 15% stakes in the 1,400-MW project.

To accommodate HKE's entry and the enlarged holding of Union Energy, Tomen Corp of Japan, an original leader in UPDC, trimmed its interest in UPDC to 29% from 34% earlier.

UPDC chairman Koichi Atsuta said the cost of the Hin Krut project had risen by US$100 million to $1.3 billion as a result of more investment in additional protection measures.

At the 700-MW Bor Nok plant, Electric Power Development Co (EPDC), a Japanese utility, has acquired a 49% interest in Gulf Electric Co, the part owner of the project, for 1.24 billion baht

EPDC bought the stake from Lanna Resources Plc which at the same time sold 1% of its share in Gulf Electric to Mitsiam International (Thailand), an affiliate of Mitsui & Co, which also paid 12.70 baht a share.

The combined 51% share acquisition by EPDC and Mitsui reaffirmed the interest of foreign and local investors in the future of the Thai power sector, said Sarath Ratanavadi, managing director of Gulf Electric

Meanwhile, a new round of confrontations between opponents and supporters of the Hin Krut and Bor Nok projects flared, with both sides making their points to the higher authorities.

Against a backdrop of angry protests, marked in one case by harassment of researchers conducting environmental impact studies, supporters of the project have raised their profile in an attempt to be heard by the public.

Nepo officials, for example, mounted a campaign in defence of coal, saying that the country needed to reduce its heavy reliance on natural gas as a fuel source for generation. At the same time, however, some cabinet ministers seeking to score points with the electorate suggested that the two plants be reconfigured to use gas.

As the debate dragged on, a group of local leaders submitted a formal letter to the government, demanding that it make a decision once and for all on the fate of the Hin Krut project.

Boontham Daengkrua, who represents 17 sub-district administration bodies in Prachuap Khiri Khan, said the project had been left in limbo long enough and the government must quickly decided whether to press ahead with the plan or scrap it.