Taiwan to raise electricity rates for industrial users mid-October

Taipei, Sept. 30 (CNA) Industrial users in Taiwan will see their electricity rates increase by an average of 12.5 percent from Oct. 16, in the wake of heavy losses posted by debt-laden state-run Taiwan Power Co. (Taipower), the Ministry of Economic Affairs (MOEA) announced Monday.

The year's second electricity rate hike has been proposed to shore up Taipower's finances, as the company has been supplying electricity at a loss to reduce the impact of high energy prices on the public in Taiwan, the ministry said in a statement.

Taipower's debt ratio stands at whopping 93 percent and the company posted an accumulated deficit of NT$434.8 billion (US$13.72 billion) as of July 31, according to Taipower's monthly published financial reports.

To address Taipower's financial woes, the central government plans to inject NT$100 billion into the public utility in its 2025 budget, pending approval from the Legislature.

On Monday the MOEA's electricity price review committee decided to further increase electricity rates, but maintained those on residential users and small businesses at the current level of NT$2.77.

Taipower did not plan in the proposed hikes to raise rates for around 14.52 million households, or 95.2 percent of its customers, the MOEA explained.

The electricity price review committee decided on a rate hike of 12.5 percent, instead of the 14 percent Taipower proposed, to ensure Taiwanese businesses remain competitive, according to the statement.

Once implemented, the hiked electricity rate for industrial users will be NT$4.29 per kilowatt hour, lower than the NT$4.65 charged during the first half of 2024 in South Korea, which the MOEA said is Taiwan's main competitor in the global market.

Taipower Vice President Tsai Chih-meng (蔡志孟) told reporters that the electricity rate hike is expected to add NT$15 billion to its revenue this year between Oct. 16 and Dec. 31.

However, several sectors have been exempted from the hike, including businesses catering to domestic demand for products in people's everyday life, food companies, retailers including public markets, supermarkets, hypermarkets and convenience stores.

The electricity rate hike will also not apply to sectors that meet two requirements: a decline of 5 percent or more in electricity use, and a decrease of 15 percent or more in production value or sales.

Sectors that meet only one of these two requirements will be eligible for the lower 7 percent rate hike, according to the MOEA.

In response, the Petrochemical Industry Association of Taiwan said that smaller businesses are expected to be affected more, as large plants are usually built with combined heat and power facilities that generate electricity for their own use.

Meanwhile, contract chipmaker Taiwan Semiconductor Manufacturing Co. gave no comment on the electricity rate hike, while its smaller rival United Microelectronics Corp. said the hike means higher costs, but the scale of the impact requires further evaluation.

China Steel Corp. estimated that the rate hikes will add NT$942 million to its annual electricity bill, but more specific figures will only be available after Taipower publishes details, such as rates for different time of the day.