Legislature to consider freeze on electricity rates
The legislature on Friday is to discuss a proposal to freeze electricity rates, after opposition caucuses yesterday raised motions calling on the Cabinet to halt a planned rate hike of 3 to 25 percent.
The Legislative Yuan’s Procedure Committee approved two separate proposals on the issue from the Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) caucuses.
The KMT proposal said that raising electricity rates could lead to a new wave of consumer goods price hikes.
The KMT said it opposed Taiwan Power Co (Taipower) implementing the policy, and demanded that the Executive Yuan oversee efforts to review existing energy policies and propose changes that would protect public welfare, maintain steady electricity supply and stabilize the utility’s operations.
TPP Legislator Lin Kuo-cheng (林國成) called on the Ministry of Economic Affairs to issue a comprehensive report to the legislature’s Economics Committee on the nation’s energy policy, pricing structure, and Taipower’s expenditures and income.
The office of KMT caucus convener Fu Kun-chi (傅崑萁) said that he was happy to work with the TPP in overseeing the Democratic Progressive Party (DPP) on matters of public welfare.
It also said that Fu is considering drafting amendments to the Electricity Act (電業法) to require legislative approval of decisions made by the ministry’s power price review committee.
The power price adjustments would severely affect the consumer price index and people’s disposable income, and such far-reaching matters should be deliberated at the Legislative Yuan, which represents the general public, instead of the few, Fu said.
DPP caucus convener Chuang
Jui-hsiung (莊瑞雄) said the legislature established its power pricing review committee in 2015, and all resolutions considered the public’s needs.
Taipower is running an accrued deficit of NT$380 billion (US$11.91 billion), Chuang said, adding that the price hikes had considered the legislature’s previous proposals to freeze electricity rate increases for the agriculture and fisheries sectors, schools and social welfare groups.
Separately, the legislature’s Procedure Committee also approved a proposal to have National Audit Office Auditor-General Chen Jui-min (陳瑞敏) make a report on the central government’s fiscal 2022 budget.
The report would also focus on the third phase of the Forwardlooking Infrastructure Development Program and budgets for COVID-19 pandemic relief programs, the committee said.
IT IS COMMON knowledge that average electricity rates in Taiwan are much lower than those in other countries, and have basically remained the same for decades. The industrial electricity prices are especially low.
During the past several years of economic growth, industrial power consumption has increased, and in recent years, due to the war between Russia and Ukraine, energy costs have increased drastically. If electricity prices are not raised, taxpayers basically have to subsidize the electricity bills of industries and big corporations.
Taiwan Power Co has deficits running into the hundreds of billions of New Taiwan dollars. The main reason is low electricity prices. Of course, the government should take care of the public, especially disadvantaged groups.
That is why when the Executive Yuan laid out the policy of raising electricity rates, industrial and corporate users were targeted first. Disadvantaged groups, household electricity users and industrial electricity users suffering economic losses are excluded.
Some people have said that the electricity prices have to be raised because of the government’s non-nuclear energy policy. This is not the case.
In South Korea, nuclear energy accounts for 30 percent of the country’s electricity generation, but the cumulative losses of electricity companies have surpassed NT$750 billion (US$23.51 billion). In France, nuclear energy accounts for 60 percent of electricity generation, but the cumulative losses of the electricity companies are about NT$570 billion.
The French government has had to provide a subsidy of NT$670 billion to cover the losses. Obviously, electricity rates have more to do with the enormous increase of energy costs as a result of global events.
Given that electricity prices in Taiwan are too low, industrial users have been able to take advantage of this and consumption has increased year by year. If electricity rates continue to remain the same, this means that all Taiwanese would have to pay for costs that keep rising. This is not fair at all.
In advanced countries, everything is based on a free-market mechanism. In Taiwan, however, rate changes have to go through an electricity price review committee organized by the Ministry of Economic Affairs. In this way, energy costs can be discussed and the public’s well-being can be ensured.
The electricity rate policies in 2022 and last year proved that only those who consumed a great amount of electricity were impacted by the increase. For household electricity users, no harm was done.
Additionally, the government considered factors such as the COVID-19 pandemic to adjust electricity rates accordingly. In 2022, when electricity prices were raised, it did not affect the industrial sectors focused on domestic demand, while social welfare organizations were excluded.
When electricity rates are raised, only those who consume a great amount of electricity and the industrial sectors will be affected. These users have been benefiting from Taiwan’s inexpensive electricity prices, and it is right that they should be asked to pay more for energy from now on.
These major power consumers are perfectly aware of increases in manufacturing costs and the need to adjust product prices, but when it comes to dealing with energy costs, they try to prevent a reasonable change to the electricity rates.
They simply want to take advantage of taxpayers and such an attitude is unacceptable.
Chen Ping-hei is a distinguished professor in National Taiwan University’s Department of Mechanical Engineering.