Royal Speech by His Majesty the King Bhumibol Adulyadej “The growth of the nation is the prosperity of all people, arising out of the work or acts of all people nationwide. It can be considered that everyone has performed his duty for the benefit of the country according to his skill and capability and has lent a hand to each other. No one can live and work for the nation on his own.” An Excerpt from the Royal Guidance on the Occasion of the Bestowal of Degrees to Chulalongkorn University Graduates at Maha Chulalongkorn Building 10 July 1970 Contents Royal Speech by His Majesty the King Bhumibol Adulyadej 2 Message from the Chairman of the Energy Regulatory Commission 4 Energy Regulatory Commission 6 Office of the Energy Regulatory Commission 8 Achievements in Fiscal Year 2011 16 Various Activities in Fiscal Year 2011 28 Financial Statements and Worksheet of the OERC and the Power Development Fund in Fiscal Year 2011 31 Action Plan for Fiscal Year 2012 57 Appendices 63 Appendix 1 : Summary of the Energy Regulatory Commission Meetings 64 in Fiscal Year 2011 Appendix 2 : Summary of the Minutes of Meetings of the Sub-Committees 126 under Section 24 of the Energy Industry Act B.E. 2550 (2007) Message from the Chairman of the Energy Regulatory Commission The year 2011 has marked another important step forwards of the Energy Regulatory Commission (ERC) and the Office of the Energy Regulatory Commission (OERC) in materializing the development of energy industry regulation of the country, in accordance with the government policy, to be more effective to strengthen the national energy security, which is a key factor enhancing the country’s competitiveness in the international arena. There are two major achievements of the ERC in the 2011 fiscal year. The first one is the Regulation of Energy Prices, by reviewing Thailand’s electricity tariff structure for the period of 2011 – 2015, according to which the Automatic Power Tariff Adjustment (Ft value) has been reset at zero so that the electricity price could best reflect the economic costs, and which has been effective since July 2011 onwards, including the regulation of natural gas transmission service tariff of PTT Public Company Limited, taking into account relevant factors in the future and actual variable costs. The second major achievement is the Enhancement of Energy Supply Security – in the 2011 Fiscal Year, the ERC has regulated power purchase from Small Power Producers (SPPs) through the Regulation for the Purchase of Power from Small Power Producers, under Firm Contracts, Using Cogeneration System, B. E. 2553 ( 2010), to be consistent with Thailand Power Development Plan 2010-2030, 2nd Revision, totaling 39 projects, with a total proposed sale capacity of 3,510 megawatts, as well as the power purchase from Very Small Power Producers that generate electricity from renewable sources through the Regulation for the Purchase of Power from Very Small Power Producers, exclusively for the Generation from Renewable Energy, B.E. 2549 (2006), totaling 1,339 projects with a total proposed sale capacity of 5,886.86 megawatts. In addition, the ERC has also featured the protection of benefits and the participation of energy consumers by encouraging local communities’ and public participation in the development and regulation of energy industry under the Energy Industry Act, B.E. 2550 (2007) (the Act) to ensure that the energy industry regulation has been carried out with transparency and fairness and that energy consumers nationwide have been protected. In so doing, the Regional Energy Consumer Committees (RECCs) have been set up in all 13 regions across the country to represent energy consumers in handling complaints of the people who have been affected by energy industry operations, giving advice to the ERC on the protection of energy consumers, and proposing corrective and improvement measures regarding energy service provision, and so on. On the part of the promotion of energy consumers’ participation, the Power Development Fund has been established. In the 2011 Fiscal Year, the ERC has issued several regulations and related announcements to support the operations of the Power Development Fund, including the recruitment of Community Development Committees (CDC) in areas surrounding power plants to manage the Power Development Fund in designated areas in accordance with the objectives set forth in the Act and to genuinely meet the needs of individual communities. The results of our operation over the past year have shown that the ERC together with the OERC have taken part in enhancing the efficiency and effectiveness of energy industry operations in Thailand in accordance with the direction and milestones of the energy industry regulation specified by the ERC. The regulation has been undertaken in accordance with the regulations, rules, announcements and requirements issued by the ERC and pursuant to the energy policy to strengthen energy security of the country under the Strategic Plan for Energy Industry Regulation, No. 1 (2008 - 2012). The ERC as well as the OERC would like to commit ourselves to enhancing energy industry regulation to be more effective and efficient, together with accountability to the public, entrepreneurs and Thai society, including the environment, which will lead to energy security so that the Thai economy would be driven to robust growth on a genuinely sustainable path. Professor Emeritus Dr. Direk Lavansiri Chairman of the Energy Regulatory Commission 4 Annual Report 2011 Vision, Mission and Core Values Vision To be the core agency that regulates energy industry operation with transparency in order to achieve the security of Thai energy industry, public confidence enhancement and reliability with international standards and acceptance. Mission To regulate energy industry operation in order to establish a secure energy system that is reliable, efficient and fair for both energy consumers and energy industry operators, while remaining environmentally friendly, by adhering to fair and transparent execution of the defined duty and responsibilities for the benefit of sustainable development of the country in terms of social, economic and environmental aspects. Core Values “TRUST,” an acronym reflecting the belief, value and desirable behavior in energy industry regulation, consists of : Stakeholders can be confident in the ERC’s decisions and Trust T actions. The ERC will execute its duty without prejudice and the ERC’s Reliability and Consistency R decisions will be consistent over time. The ERC will work together with team spirit to achieve the Unity U defined vision. The ERC’s operation and decisions will be accountable and Social Accountability S open to public participation. The ERC’s operation, decisions, appeal process and complaint- Transparency handling will be transparent and in compliance with the law, T and Independence with high relevance to stakeholders and financial independence. the Energy Regulatory Commission & Office of the Energy Regulatory Commission 5 Energy Regulatory Commission With the enactment of the Energy Industry Act, aiming to restructure the energy industry management by separating the policy-making, regulatory function and energy industry operation from each other, greater opportunities are opened for the private sector, communities and the general public to participate and take roles in the industry so that the energy industry operation would be more effective and secure, rendering adequate and extensive supply of energy with fair prices and standard quality to meet the demand and enhance sustainable development of the country in the social, economic and environmental aspects. The ERC was set up under the Energy Industry Act to regulate the electricity and natural gas industry operation pursuant to the state policy, with the OERC serving as Secretariat to the ERC. The 1st set of ERC was graciously appointed by HM the King on 1 February 2008. 1st Set of ERC (2008 - 2011) Mr. Chongchet Boonkerd Professor Emeritus Dr. Direk Lavansiri 5 1 Chairman, Energy Regulatory Commission Commissioner Mr. Nopadon Mantajit 6 Lt. Thaksin Limsuvan 2 Commissioner Commissioner Mr. Chalit Ruengvisesh Dr. Supichai Tangjaitrong 3 7 Commissioner Commissioner 5 6 3 7 Dr. Pallapa Ruangrong 4 2 1 4 Commissioner 6 Annual Report 2011 According to the provision of Section 17 of the Act, it is stated that, at the initial term, after three years’ time, three Commissioners shall be discharged from office by drawing lots; such a discharge shall be regarded as the completion of the office term, and that a new set of Commissioners shall be selected to work instead of the previous one. In this regard, a Screening Committee had been appointed to select and nominate Energy Regulatory Commissioners, pursuant to Section 14 of the Act, and the list of new Energy Regulatory Commissioners had been proposed to the Minister of Energy for further submission to the Cabinet for approval. On 26 April 2011, the Cabinet approved the 2nd set of ERC and the latter was graciously appointed by HM the King on 4 July 2011, comprising the following Commissioners : 2nd Set of ERC (2011 - Present) Professor Emeritus Dr. Direk Lavansiri Mr. Boonsong Kerdklang 1 Chairman, Energy Regulatory Commission 5 Commissioner 2 Mr. Nopadon Mantajit 6 Mr. Pisit Soontarerat Commissioner Commissioner Dr. Pallapa Ruangrong Mr. Sun Vithespongse 3 7 Commissioner 6 5 4 7 Commissioner Lt. Thaksin Limsuvan 2 1 3 4 Commissioner the Energy Regulatory Commission & Office of the Energy Regulatory Commission 7 Office of the Energy Regulatory Commission The Energy Industry Act of 2007 (the Act) stipulates the establishment of the Office of the Energy Regulatory Commission, or OERC, to serve as the Secretariat to the ERC. The OERC is a state agency with the status of a juristic person under the ERC supervision and plays a key role in supporting duty execution of the ERC in order to achieve the objectives of the Act in the formation of balanced development in energy, economic, social and environmental dimensions, which will bring about efficient energy management system of Thailand and will enhance the national economic system to be competitive at both regional and global levels.