Introduction
Thailand currently adopts an enhanced single buyer model for the electricity market under which the Electricity Generating Authority of Thailand (the “EGAT”) exclusively transmits electricity to the Metropolitan Electricity Authority (the “MEA”) and the Provincial Electricity Authority (the “PEA”) (as retail operators) for their further distribution to end-users. According to the latest National Reform Plan B.E. 2560 (the “National Reform Plan”), Thailand is exploring the possibility of transforming and liberalizing the electricity market to allow private sectors to participate in Thai electricity network systems. This development should enhance competitiveness in the electricity market and eventually reduce lower electricity prices in Thailand.
Part of the master plan (set out in under the National Reform Plan) is the enactment of Criteria and Guidelines for the Preparation of the Third Party Access Code for the Electricity Network System (the “Third Party Access Framework Notification”) to allow a private entity to utilize from, and to connect with, the existing electricity grid system of EGAT, MEA and/or PEA.
What are the obligations/key principles under Third Party Access Framework Notification?
The Third Party Access Framework Notification requires EGAT, MEA and PEA (the “Regulated Entities”) to prepare and issue a third party access code (the “TPA Code”) in accordance with guidelines attached to the draft Third Party Access Framework Notification (the “TPA Framework Guidelines”).
The TPA Framework Guidelines sets out the key principles to be included in the TPA Code such as:
- The service to be provided under TPA Code will be on a first-come-first-serve basis and a use-it-or-lost-it basis whereby the service provider can transfer or assign any of the unutilized available transferred capacity to other users in the system;
- The TPA Code must contain provisions concerning the evaluation of capacity allocation and the remaining available transferred capacity (the “ATC”) of the service provider such as electricity usage demand, reserved amount of the capacity for the stabilization of the system;
- The service fee and indemnity amount payable by the user must also be proposed for Energy Regulatory Commission’s approval (the “ERC”) prior to the announcement of the implementation of those fees. In addition, the service fee to be announced by the service provider must reflect the actual cost of such services as well as taking into account of the appropriated profit to be derived from the electricity business of the energy operator pursuant to the Electricity Tariff Regulatory Framework issued by the ERC. The evaluation of such cost and service fee and the prudent cost practice of an international energy business has to be transparent ; and
- The TPA Code must integrate processes and restrictions to ensure that a service provider’s affiliate(s) and subsidiary(ies) do not receive any additional privileges from the utilization and/or connection to the system that are not available to other users.
What’s next?
The key benefits of the enactment of the Third Party Access Framework Notification are not only to enhance the competitiveness of the electricity market by allowing a private entity to access and connect with the grid of the of the Regulated Entities or reduce electricity prices in Thailand, but also to ensure that the application process and the benefits to be received under the TPA Code of each Regulated Entities will be transparent, consistent and fair for those private entities.
To date, the public hearing process for the draft Third Party Access Framework Notification held by the ERC concluded on 3 February 2022. The results of the hearing will soon be published on the ERC website. If there are no further proposed amendments, the draft Third Party Access Framework Notification will be soon endorsed by the ERC and will be further published on the Royal Gazette.
Subject to an official enactment process in the Royal Gazette, the Regulated Entities will be required to procure and submit the draft TPA Code to the ERC within 180 days after the effective date of the Third Party Access Framework Notification. If the Regulated Entities receive an approval for the proposed TPA Code, the Regulated Entities must issue and announce the approved TPA Code within 30 days from the date the ERC approved the TPA Code.
