Opporturity Day.ppt (March 5,2003) · Small General Services 4,870 13.77 5,141 13.78 5.57 Medium General Services 8,078 22.84 8,440 22.62 4.48 - The Large Medium and Small General

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AgendaAgendaAgendaAgenda

�� Power IndustryPower Industry

�� Benefits of Interest ReductionBenefits of Interest Reduction

�� Operating PerformanceOperating Performance

�� Awards in Awards in 20022002

�� AppendixAppendix

Power IndustryPower IndustryPower IndustryPower Industry

5

Power Industry:Power Industry:Forecast of Peak Generating in ThailandForecast of Peak Generating in Thailand 5

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Forecast of Peak Generating in ThailandForecast of Peak Generating in Thailand

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Source: Thailand Load Forecasting Sub-committee,Source: Thailand Load Forecasting Sub-committee,Energy Planning and Policy Office (EPPO)

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Power Industry:Power Industry:Average Annual Expansion of Power DemandAverage Annual Expansion of Power Demand

6Average Annual Expansion of Power DemandAverage Annual Expansion of Power Demand

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Source: Thailand Load Forecasting Sub-committee,

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Source: Thailand Load Forecasting Sub-committee,Energy Planning and Policy Office (EPPO), Aug 2002

7

Current Power Industry:Current Power Industry:Monthly Peak & Energy GenerationMonthly Peak & Energy Generation 7Monthly Peak & Energy GenerationMonthly Peak & Energy Generation

Peak GenerationMW

Peak Generation

15,500

16,000

16,500

17,000

15,500

16,000

16,500

17,000

5.1%4.5%

9.8%3.4%

7.3%7.7% 6.5%

5.4% 3.7%10.1%7.6% 8.3%

- Highest demand, so far, was on April 4th with 16,681MW with 3.44% increase yoy

13,000

13,500

14,000

14,500

15,000

13,000

13,500

14,000

14,500

15,0005.1%

3.3% 4.1%2.4% with 3.44% increase yoy

13,000Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Month

13,000

2002 2003 2001

-Average monthly energy generation growth in the fiscal year* is 5.07%

Energy Generation

10,000

10,500

GWh

10,000

10,500

8.5%

4.4%6.2% 6.6% 8.6% 5.9%

5.6%8.2%

year* is 5.07%-Average yearly energy generation growth in the fiscal year is 5.67%

8,000

8,500

9,000

9,500

8,000

8,500

9,000

9,500

3.9%

3.2%1.4%

3.2%1.7%

4.4%6.6%

5.6%13.6%

8.2%

13.0%

Source :EGAT , Energy Generation Monthly ReportSource :EGAT , Energy Generation Monthly Report

year is 5.67%* Thailand Government Fiscal year October* Thailand Government Fiscal year October--SeptemberSeptember

7,500Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Month

7,500

2001 2003 2002

Source :EGAT , Energy Generation Monthly ReportSource :EGAT , Energy Generation Monthly Report

8

Current Power Industry:Current Power Industry:Energy ConsumptionEnergy Consumption 8Energy ConsumptionEnergy Consumption

Energy Consumption for Energy Consumption for 2002 2002 compare with compare with 20032003

- The Large, Medium and Small General Service comprising over 70%

Sale Increase

GWh Weight (%) GWh Weight (%) (%)

Residential 7,422 20.98 7,918 21.22 6.67

Customer Category2002 2003 (Forcast)

General Service comprising over 70% of total electricity consumption.

- The average growth for all customer

Residential 7,422 20.98 7,918 21.22 6.67

< 150 kWh per month 453 1.28 464 1.24 2.57

> 150 kWh per month 6,970 19.71 7,453 19.97 6.94category in 2003 is 5.51% and residential is the most potential in demand growth.

> 150 kWh per month 6,970 19.71 7,453 19.97 6.94

Small General Services 4,870 13.77 5,141 13.78 5.57

Medium General Services

8,078 22.84 8,440 22.62 4.48 demand growth.- The Large Medium and Small General

service growth are 5.8% , 4.48% and 5.57% respectively, indicate the

Services8,078 22.84 8,440 22.62 4.48

Large General Services 12,092 34.19 12,793 34.28 5.80

Specific Business Services

1,601 4.53 1,676 4.49 4.675.57% respectively, indicate the growth for Thailand's industrial sector in year 2003

ServicesGovernment Institutions

1,146 3.24 1,183 3.17 3.19

Street Lighting 161 0.45 169 0.45 4.82

Total 35,371 100 37,319 100 5.51

Source: PEA 2002

9

Current Power Industry:Current Power Industry:Tariff StructureTariff Structure 9Tariff StructureTariff Structure

- The existing average retail tariff is about 4.05% higher than the marginal cost

DifferenceAverage Tariff (Baht/kWh)4.05% higher than the marginal cost based retail tariff.

- There is significant subsidization for the

Difference

Marginal Cost Based

Existing Tariff (%)

Residential 2.31 2.28 1.32

Customer CategoryAverage Tariff (Baht/kWh)

- There is significant subsidization for the agricultural pumping customers.

- The overall residential tariff reflects the marginal costs; however, the application

Residential 2.31 2.28 1.32

Small General Services 2.47 2.77 -10.83Medium General Services 1.94 2.30 -15.65 marginal costs; however, the application

of the progressive block rates has resulted in cross-subsidization within the category itself. Large residential

Services 1.94 2.30 -15.65

Large General Services 1.90 2.00 -5.00Specific Business Services 1.78 2.00 -11.00 category itself. Large residential

customers have to subsidize small residential customers.

Services 1.78 2.00 -11.00Government Institutions 2.31 2.27 1.76Agricultural Pumping

2.37 1.80 31.67- Moreover, customers under the small

/medium general services and specific business services will pay for electricity

Agricultural Pumping Service 2.37 1.80 31.67

Street Lighting 1.83 0.00

Total 2.11 2.20 -4.05business services will pay for electricity in excess of the marginal costs.

Total 2.11 2.20 -4.05

Source: EPPO, February 2001

10

Current Power Industry:Current Power Industry:Comparison of neighboring tariffsComparison of neighboring tariffs 10Comparison of neighboring tariffsComparison of neighboring tariffs

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- Thai tariffs are the lowest among the neighboring countries in almost all categories. Exceptional

Source : EGATSource : EGAT

- Thai tariffs are the lowest among the neighboring countries in almost all categories. Exceptional is in industrial classification.

- Average tariff is 2.45 Baht per unit for combined categoriesNote:1)�2001 figure (Oct 2000 – Sept 2001)1)�2001 figure (Oct 2000 – Sept 2001)2) Tariffs excluded VAT3) Average Baht 44.33/ US$

Benefits of Interest Benefits of Interest Benefits of Interest Benefits of Interest ReductionReductionReductionReduction

12

Benefit of Interest Reduction:Benefit of Interest Reduction:Interest SavingInterest Saving 12Interest SavingInterest Saving

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* Average MLR of KTB, SCB, BBL and BAY

The amendment on loan agreements

�� SCB, BBL and BAY

Interest rate reduction are as follows: -1. MLR* - 1.50% for period of the first three years (from July 1, 2002 to June 30, 2005.)2. MLR - 1.125% for period of the next three years (from July 1, 2005 to June 30, 2008.)2. MLR - 1.125% for period of the next three years (from July 1, 2005 to June 30, 2008.)3. MLR flat for the remaining period(starting from July 1,2008.)The total saving is around Baht 2,734 million

In conjunction, the prepayment fee will be 3%,2%and 1% pertinent to such periodsIn conjunction, the prepayment fee will be 3%,2%and 1% pertinent to such periods

Operating PerformanceOperating PerformanceOperating PerformanceOperating Performance

14Operating Performance Operating Performance 20012001&&20022002 14Operating Performance Operating Performance 20012001&&20022002

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Awards in Awards in 20022002Awards in Awards in 20022002Awards in Awards in 20022002

26

Awards in Awards in 2002 2002 ::Good Corporate GovernanceGood Corporate Governance 26Good Corporate GovernanceGood Corporate Governance

- RATCH ranked the 3rd in Asiamoney corporate governance poll for utilities sector in Asiapoll for utilities sector in Asia

Source : Asiamoney October Source : Asiamoney October 20022002

27

Awards in Awards in 2002 2002 ::Good Corporate GovernanceGood Corporate Governance 27Good Corporate GovernanceGood Corporate Governance

Award Title : Disclosure Award

Award details : Disclosure of Form 56-1

(Particular on Risk Factors and

Nature of Business)

Organizer : The Office of the Securities Organizer : The Office of the Securities

and Exchange

CommissionCommission

Date : 5th November 2002

28

Awards in Awards in 2002 2002 ::Environmental and Social ResponsibilitiesEnvironmental and Social Responsibilities 28Environmental and Social ResponsibilitiesEnvironmental and Social Responsibilities

Award Title : Excellent quality Award onNationwide basisNationwide basis

Award details : Excellent maintenance ofNavaratchaburirom ParkNavaratchaburirom Park(a recreational center located in front of the power plant built and maintained by Ratchburi and maintained by Ratchburi Generating Co.)

Organizer : Ministry of Public Health Date Organizer : Ministry of Public Health Date 31st October 2002

AppendixAppendixAppendixAppendix

30

Appendix: Appendix: Thai Electricity Market Structure Thai Electricity Market Structure -- Current StructureCurrent Structure 30Thai Electricity Market Structure Thai Electricity Market Structure -- Current StructureCurrent Structure

Key Features of current structureSPPs EGATIPPs RATCHEGCO

• Currently, the private sector has only a limited role ( generation only).

• EGAT has a market monopoly at the wholesale

SPPs EGATIPPs EGCO

•Power Purchase• EGAT has a market monopoly at the wholesale level, supplying electricity to PEA, MEA and some direct customers.

• There are few incentives for private power

Governm

ent

EGAT

•Power Purchase•System Operation•Transmission•Bulk Power Supply

• There are few incentives for private power producers to improve efficiency due to lack of market competition (aside from when bidding for the PPA with EGAT).

PEA MEADirect Customers

the PPA with EGAT).

• As EGAT is responsible for long-term electricity planning, new generating capacity must be

Customers Customers

planned and approved through/by EGAT.

• PEA and MEA are responsible for distribution/retail supply to most end users at the EGAT: Electricity Generating Authority of Thailand

Source: Electricity Supply Industry Reform and Thailand Power Pool, November 2000, modified by RATCH consultant

distribution/retail supply to most end users at the prices regulated by EPPO.

• In some limited cases (mostly industrial users), some end users are able to purchase electricity

EGAT: Electricity Generating Authority of ThailandPEA: Provincial Electricity AuthorityMEA: Metropolitan Electricity AuthoritySPP: Small Power Producer

some end users are able to purchase electricity either directly from EGAT or SPPs.

SPP: Small Power ProducerIPP: Independent Power ProducerEPPO: Energy Policy and Planning Office

31

Appendix:Appendix:Thai Electricity Market Structure Thai Electricity Market Structure –– New Electricity Supply ArrangementNew Electricity Supply Arrangement31Thai Electricity Market Structure Thai Electricity Market Structure –– New Electricity Supply ArrangementNew Electricity Supply Arrangement

Hydro Plants GENCOsGE

NC

Os

- Over the time of Power Pool operating, customer groups

Key Features of NESA structure

Hydro Plants

Independent System Operator

Forward &

Financial Market

GENCOsB

ilateral Contract

Bilateral C

ontract

GE

NC

Os

and interest parties need for reform it to improve for more efficiency, economic and transparency in the operation of pricing.

Independent System Operator

Forward &

Financial Market

Grid Company

Spot Market

Bilateral C

ontract

Bilateral C

ontract

Bilateral

Contract

Supplier

Custom

er

- NESA provide greater choice for market participants than the Pool-based trading to purchase and trade electricity with more active demand-side participation in the

Supply

Distribution

Direct Customers

Forward &

Financial Market

REDCO

Bilateral C

ontract

Bilateral C

ontractSupplier D

irect C

ustomer

Trader

market, while maintaining the operation of a secure and reliable electricity system by the establishment of close to real time balancing arrangements.

Balancing

Mechanism

SupplyDirect Customers

Customers

Forward &

Financial Market

Retail Co.- The forward trading would lead to the emergence of forward price curves that would better facilitate efficient new entry, by providing both generators and suppliers

Balancing

Mechanism

CustomersR

etailerwith clearer signals.

- The new balancing mechanism and settlement arrangements were designed to ensure the national grid

Source: Electricity Supply Industry Reform and Thailand Power Pool, November 2000

arrangements were designed to ensure the national grid company and independent system operator (ISO) was able to maintain short-term quality and security of supply

- The Balancing Mechanism and the Settlement process required new IT systems to be built and operated.

32

Appendix:Appendix:Thai Electricity Market StructureThai Electricity Market Structure -- Third Party AccessThird Party Access 32Thai Electricity Market StructureThai Electricity Market Structure -- Third Party AccessThird Party Access

Key features of third party access

• Under a third party access system, EGAT would in • Under a third party access system, EGAT would in most cases maintain its monopoly at the wholesale market level (central supplier).

SPPs GENCOsIPPs RATCHEGCO

• “Third Party Access” regime would be introduced so that generating companies could directly supply end users through the network of PEA, MEA or EGAT.

IND

EP

EN

DE

NT R

EG

ULA

TOR

EGAT

•Power Purchase•System Operation•Transmission•Bulk Power Supply

users through the network of PEA, MEA or EGAT.

• An Independent Regulator would be set up to regulate transmission/distribution pricing and other standards.

IND

EP

EN

DE

NT R

EG

ULA

TOR

PEA MEA

transmission/distribution pricing and other standards.

• EGAT’s power generating assets (i.e. Thermal, Hydro, CCGTs, etc.) would be ring-fenced (and/or

Large Customers Small Customers Small Customers

Hydro, CCGTs, etc.) would be ring-fenced (and/or grouped) and operate as business units (profit centres). Source: Electricity Supply Industry Reform and Thailand

Power Pool, November 2000, modified by RATCH • EGAT would be structured as a holding company.

Grid Company and other subsidiaries would be separated out and incorporated as separate entities,

Power Pool, November 2000, modified by RATCH consultant

separated out and incorporated as separate entities, whist remaining under the EGAT holding company.

33

Appendix: Appendix: Operation and Maintenance Schedule for Operation and Maintenance Schedule for 20032003 33Operation and Maintenance Schedule for Operation and Maintenance Schedule for 20032003

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34

Appendix:Appendix:MiniMini Hydro ProjectsHydro Projects 34MiniMini Hydro ProjectsHydro Projects

Project Contract Structure

7��

RATCH

RE EGATHydro Operating Unit

EGATPower Purchaser

OMAPPAHydro Operating UnitPower Purchaser

Mini Hydro Projects

• All commercial contracts i.e. Power Purchase Agreements (PPAs) and Operation and

Maintenance Agreement (OMA) have been structured to mitigate project risk

• 25 years non-firm SPP with tariff structure at Baht 1.68 per unit plus incentive of Baht 0.20

per unit from Energy Conservation Fund for the next 5 yearsper unit from Energy Conservation Fund for the next 5 years

35

Appendix:Appendix:Mini Hydropower Development ProjectsMini Hydropower Development Projects 35Mini Hydropower Development ProjectsMini Hydropower Development Projects

Project Chao Phraya Pasak Cholasith Khlong Tha DanProject Chao Phraya Pasak Cholasith Khlong Tha Dan

Installed Capacity (MW) 12 6 10

Type of PPA Non�firm Non�firm Non-firm

Term of PPA (yrs) 25 25 25Term of PPA (yrs) 25 25 25

Location (Province) Chainat Lopburi Nakorn Nayok

Energy Generation (GWh/ yr) 60�52 31�81 27�99

Use in Station Service and RID (GWh ��yr) 0�54 0�54 ��54

Energy Sale (GWh ��yr) 59�98 31.� � 27�45

Project Cost (Million Baht) 657 �87 324 �04 278 �50Project Cost (Million Baht) 657 �87 324 �04 278 �50

36

Appendix: Appendix: Future ProjectsFuture Projects 36Future ProjectsFuture Projects

Biomass Projects*Project Ayutthaya Suphanburi

• All commercial contracts i.e. Power Purchase Agreements (PPAs) and Husk Sell Agreement (HSA) have been

Project Ayutthaya Suphanburi

Installed Capacity (MW) 9.9

Type of PPA Firm Firm

9.9

Sell Agreement (HSA) have been structured to mitigate project risk. To ensure the supply of husk, rice mill will

Type of PPA Firm Firm

Term of PPA (Yrs.) 21 21

Location (Province) Ayutthaya Suphanburi

be shareholder in each project

• Tentative 21 years firm SPP with tariff structure at Baht 2.30 per unit

Energy Generation 70 70

Use in Station Service 8 8

Energy Sale 62 62

(GWh/yr)

(GWh/yr)

Biomass Projects

structure at Baht 2.30 per unit

*Under studying projects

Energy Sale 62 62

Project Cost 520 520

(GWh/yr)

(Million Bath)

RATCH*Under studying projects

NP

Rice MillEGATPower Purchaser

PPA

Project 1,2,3..NHSA

Powering the FuturePowering the FuturePowering the FuturePowering the Future

Documents

Opporturity Day.ppt (March 5,2003) · Small General Services 4,870 13.77 5,141 13.78 5.57 Medium General Services 8,078 22.84 8,440 22.62 4.48 - The Large Medium and Small General