Taipei: State-owned Taiwan Power Co. (Taipower) is projected to incur more than NT$410 billion (US$13.58 billion) in accumulated losses despite implementing a rise in electricity rates starting from October. This was revealed by the Ministry of Economic Affairs (MOEA).
According to Focus Taiwan, the increase in power rates comes amidst a surge in international fuel prices over recent years, which has forced Taipower to absorb a portion of its production costs to alleviate inflationary pressure. As of July, Taipower reported NT$417.9 billion in accumulated losses. Vice Economics Minister Lai Chien-hsin explained to reporters that the power rate hike of 3.12 percent per kilowatt-hour (kWh) for residential users and small vendors is projected to generate an additional NT$6.4 billion in revenue over a year. However, this increase is unlikely to compensate for the substantial losses the company has accumulated over the years.
On Friday, the Electricity Rate Review Committee, an independent panel of experts, approved Taipower’s proposal to raise electricity tariffs, considering the company’s significant losses and the Legislative Yuan’s decision not to pass a subsidy program for the power supplier. Notably, industrial users will not experience any changes in their rates.
Taipower highlighted that the average residential electricity price currently stands at NT$2.77 per kWh, which is below the supply cost of NT$3.8 per kWh. Lai mentioned that the MOEA has requested Taipower to reduce its operating costs, potentially saving NT$1.9 billion this year. He emphasized the need for lawmakers to support Taipower’s subsidy proposal to alleviate its financial challenges.
In the first seven months of this year, Taipower reported a profit of NT$4.1 billion, a small figure compared to its vast aggregate losses. The Chinese National Association of Industry and Commerce, Taiwan, (CNAIC) expressed concerns over the inflationary pressure resulting from the power rate hike, urging the government to implement measures to mitigate the impact on consumers.
The CNAIC pointed out that while freezing prices for industrial users protects Taiwan’s competitive edge globally, consumers will face increased living costs, potentially affecting their purchasing power, especially among low-income families. The business group recommended that the government strategically plan its energy policies and encourage Taipower to enhance its financial health and efficiency to ensure energy and economic sustainability in Taiwan.
Minister of Economic Affairs Kung Ming-hsin remarked on Saturday that the local consumer price index (CPI) is not expected to rise significantly due to the latest rate hike, noting that current CPI growth has stabilized and global fuel prices have moderated. After the rate increase, the Cabinet stated that Taiwan’s electricity costs remain lower than those of neighboring countries.
Cabinet spokesperson Michelle Lee noted in a statement that post-increase, household users will pay NT$2.89 per kWh compared to NT$3.96 in South Korea, NT$6.8 in Japan, and NT$7.73 in Singapore.