COST OF LIVING/Minister signals expected hike to overall electricity rates

Taipei, March 7 (CNA) Minister of Economic Affairs Wang Mei-hua (王美花) reported to the Legislature on Thursday about the need to scale up the electricity rate in response to the operating deficit recorded by state-owned Taiwan Power Company (Taipower).

Led by Wang, economic ministry officials presented a report about the likely electricity rate hike and its impact on industry and general consumers during a hearing at the legislative Economics Committee.

As of the end of 2023, Taipower's accumulated deficit was NT$382.6 billion (US$12.14 billion) and without an adjustment to the current electricity rate, the company would suffer a further loss of NT$188.7 billion in 2024 alone, Wang reported.

The report attributed the loss to the rise of fuel prices due to the Russia-Ukraine war, which broke out in 2022, saying the average price paid by Taipower for coal rose from US$64 per metric ton in 2020 to US$276 in 2022, and the cost of natural gas doubled from NT$8 to NT$16 per cubic meter in the same period.

Wang told the committee that the cost of fuel has been the main cause of the losses, with about NT$1.2 trillion spent on fuel over the past two years.

While the final decision will be left to the electricity price review committee, which meets this month, the minister said the rate is likely to be raised for all users, industrial and residential alike.

Wang said the rate for those who use up to 330 kWh a month, which is the average monthly household consumption level, has not been raised since 2004, adding that according to 2023 International Energy Agency statistics, Taiwan's electricity rate for household users is the fifth lowest in the world (and the industrial electricity price the third lowest).

She then told lawmakers that a 5 percent increase in the rate would result in a monthly rise of about NT$34 for those who use up to 330 kWh a month.

According to the report, between 2020 and 2023 Taiwan's average household electricity rate rose by only 3 percent, while the country's industrial electricity price was raised in 2023 to an average of NT$3.38 per kWh, which represents a 32 percent increase compared to 2020.

KMT lawmakers questioned the ministry's energy policy, which calls for "nuclear-free by 2025" and for renewable energy to make up 20 percent of the national energy mix by 2025 -- a goal that is highly unlikely to be achieved as it now stands at about 9.5 percent, while nuclear power accounts for 7 percent.

Currently, 80 percent of the country's energy mix relies on imported coal and natural gas which has been strongly affected by international price fluctuations, said Kuomintang (KMT) Legislator Lu Yu-ling (呂玉玲).

KMT Legislator Yang Chiung-ying (楊瓊瓔) also called for the operational life of the country's nuclear power plants to be extended, at a time when absent amendments to existing laws all will be undergoing decommissioning by 2025.

However, when the three nuclear plants were operational in 2015 -- and nuclear power accounted for 16 percent -- the fuel cost, calculated at the current fuel price, would still push average power generating costs up to NT$3.93 per kWh, "which is not greatly different from NT$4.17 per kWh in 2023,"Wang said.

Responding to questions from Lu and Taiwan People's Party Legislator Chang Chi-kai (張啟楷) over Taipower paying too much in terms of the feed-in-tariff to promote the development of renewable energy, Wang said in 2023 Taipower's green electricity expenditure was NT$90.5 billion, or less than 10 percent of Taipower's total expenditure of NT$1 trillion in the same year.

"In addition, the FIT rate has been gradually scaled down so green power developers have started to turn to private enterprise buyers," she added.

The green power that Taipower helps transmit (rather than purchasing as its own) reached 1.7 billion kWh in 2023, a big increase from the 1.1 billion in 2022, the ministry report noted.