Premier Cho defends 12.5 percent electricity rate increase

Taipei, Oct. 1 (CNA) Premier Cho Jung-tai (卓榮泰) on Tuesday defended the decision to raise electricity rates for industrial customers starting mid-October, noting that enterprises would be helped to reduce energy consumption to offset the higher costs.

"I trust the [electricity price review committee] has carefully considered and thoroughly collected data in the course of their deliberations," Cho told reporters at the Legislature, adding that he "hoped" the average increase of 12.5 percent represented the "best decision" possible.

The rate increase is in line with Taiwan Power Co.'s (Taipower) need to cover its operating costs while taking into account the government's pledge to keep commodity prices stable, Cho said.

The premier also cited Ministry of Economic Affairs (MOEA) data that showed the updated electricity price for "large industrial users" would still be lower than in "comparable neighboring Asian countries."

Cho's comments came a day after the MOEA announced that electricity rates for industrial users will be raised by an average of 12.5 percent from Oct. 16 in the wake of heavy losses posted by Taipower, Taiwan's debt-laden state-owned energy provider.

The rate increase is expected to affect roughly 500,000 industrial customers across Taiwan.

Cho said the MOEA and the Ministry of Environment were working to establish an "energy-saving team" tasked with helping businesses with considerable electricity consumption improve their energy efficiency.

The "ultimate and highest goal" for the government, the premier said, is for "every electricity user to work to save energy."

"Reducing energy consumption really is the only way," he added.

As part of that effort, this year the MOEA has assisted 18 public office buildings and hospitals in saving approximately 4.05 million kilowatt-hours, accounting for about 7 percent of the total electricity consumption at those sites, according to a MOEA press release issued on Monday.

The MOEA also said they had budgeted NT$1.8 billion (US$56 million) in subsidies for enterprises purchasing energy-efficient equipment next year.

Taipower Vice President Tsai Chih-meng (蔡志孟) said on Monday that more than 14.5 million households and small businesses, or 95.2 percent of all electricity users, would not be affected by the planned electricity rate increases.

In that regard, he estimated that Consumer Price Index (CPI) would only increase a minimal 0.03 percentage points over the next two months.

Taipower has suffered serious losses in recent years due to surging global fuel costs and the government's reluctance to raise end-user electricity prices.

MOEA data shows that Taipower currently incurs a loss of NT$0.4 for every kilowatt-hour sold, with the company's accumulated losses surpassing NT$421.9 billion and its debt ratio reaching 93 percent.

As a result, the government has proposed to inject an additional NT$200 billion for the fiscal years of 2024-2025 in an attempt to alleviate Taipower's losses but such a plan still awaits legislative approval.