Stocks in the small power producer segment, notably BGRIM and GPSC, saw sharp declines today following news that the Consumer Council had filed a lawsuit with the Central Administrative Court, seeking to revoke announcements by the Energy Regulatory Commission and the National Energy Policy Council regarding electricity price calculation criteria, especially the “Adder” policy.
The Adder is a past renewable energy support measure that, as alleged, continues to burden consumers through the Ft (Feed-in tariffs) charge, resulting in electricity bills higher than actual costs. The Consumer Council claims that cancelling the Adder would immediately lower power bills and has requested the court issue an order before the next Ft structure review in January 2025 to align tariffs with current costs and reduce the public’s burden.
Asia Plus Securities commented that this development is a short-term negative sentiment for power stocks tied to Ft rates, particularly B.Grimm Power Public Company Limited (SET: BGRIM) and Global Power Synergy Public Company Limited (SET: GPSC), which may face concerns over reduced profit margins if the Ft is cut.
Nevertheless, the brokerage company assesses that the risk to overall profit forecasts remains limited as the legal process will take time and any retrospective amendment of power purchase agreements (PPAs) is considered unlikely from a legal standpoint. As such, Asia Plus maintains a Neutral recommendation for the sector, with business fundamentals unchanged under current assumptions.
