Taipei: The removal of NT$100 billion (US$3.42 billion) in aid to financially troubled state-owned Taiwan Power Co. (Taipower) from a special bill passed by the Legislative Yuan on Friday could lead to a hike in electricity rates, which could raise inflation, according to the Executive Yuan.
According to Focus Taiwan, after the passage of the bill, Executive Yuan spokesperson Michelle Lee stated that an electricity tariff review meeting of the Ministry of Economic Affairs (MOEA) might decide to approve a hike in power rates as Taipower failed to secure the aid. Lee indicated that an increase in power rates could push up inflation and impact consumers and the industrial sector.
Taipower echoed Lee's concerns, noting that an electricity tariff review meeting has been scheduled for September. The company plans to report its actual financial situation at that time and seek aid from the government. On Friday, lawmakers from the opposition Kuomintang (KMT), the biggest party in the Legislature, successfully pushed for the removal of NT$100 billion in aid for Taipower from the special NT$545 billion package.
The special act will allow the government to use surplus tax revenue to invest in Taiwan's security infrastructure and provide relief to industries likely to be affected by U.S. tariffs. Taipower stated that due to a failure to secure the necessary financial assistance, domestic power tariffs will be raised accordingly to compensate for the losses suffered by the company.
The MOEA reported that Taipower's accumulated losses reached NT$422.9 billion as of the end of 2024, largely due to a surge in fuel costs. As the previous power tariff review meeting agreed not to hike rates in April, the MOEA indicated Taipower is expected to incur an additional NT$33.2 billion in losses in 2025.
Opposition lawmakers have repeatedly argued that the large losses posted by Taipower resulted from the government's failed energy policies, including the phaseout of clean and more affordable nuclear power, and the purchase of renewable energy from the private sector at unreasonably high prices.
Paul Hsu, head of the General Chamber of Commerce of the Republic of China, expressed concerns that a potential hike in power rates resulting from the removal of the NT$100 billion aid to Taipower could further impact the local economy, already pressured by uncertainties from U.S. tariff policies and a stronger Taiwan dollar against the U.S. dollar. Hsu mentioned that higher electricity rates, along with U.S. tariffs, are expected to raise production costs and reduce the competitive edge of local industries, particularly in old economy sectors.
The Chinese National Federation of Industries, another major Taiwanese business group, stated before the review of the special bill that the group and its counterparts had urged the Legislative Yuan to approve the NT$100 billion aid to Taipower, considering the power supplier's challenging financial conditions.
Lee highlighted that the government's proposed NT$100 billion aid to Taipower aimed to improve the company's financial structure, ease the pressure for higher electricity rates and growing inflation, and ultimately protect the public's interests, the industrial sector, and the entire economy. She noted that Taipower staffers have been working diligently to repair power grid networks damaged by Typhoon Danas, which hit Taiwan earlier this week. Premier Cho Jung-tai expressed regret about the failure to secure financial aid for the company and hoped its personnel would not be discouraged by the Legislative vote.
While financial aid to Taipower was removed, the newly passed bill includes NT$230 billion in cash handouts to Taiwanese citizens. Lee expressed concern that the handouts would prompt the government to increase debt, an inappropriate way to manage the country's finances, ultimately leading to the next generation bearing the burden.