Electricity rates could be raised by almost 6% on average

Taipei, March 22 (CNA) An internal report of state-owned Taiwan Power Co. (Taipower) revealed that the company is seeking the government's approval to raise electricity rates by almost 6 percent on average to make up for a huge loss for the company.

The Ministry of Economic Affairs will hold a power rate assessment review meeting next week to discuss whether Taipower will be allowed to hike power tariffs in April.

The state-run company has shouldered NT$422.9 billion (US$14.97 billion) in accumulated losses.

Taipower said to prevent its losses from expanding, the company needs to generate an additional NT$50 billion in revenue this year through the electricity rate hikes.

Its report showed power rates for household users and small businesses which consume less than 330 kilowatt-hour (kWh) a month will be raised by 11-33 percent.

Household users and small businesses that consume more than 330 kWh a month will see their electricity bills grow no more than 10 percent under a progressive tariff mechanism, the report showed.

In addition, power rates for the industrial sector are expected to be raised only slightly, the report indicated.

These measures would bring average tariff hikes to almost 6 percent as a whole, the report showed.

According to Taipower, the power rate hikes were considered after the Legislative Yuan cut the general government budget plan, including two NT$100 billion subsidy projects for the power company, as well as other subsidies that will be added to its construction funds for offshore islands.

Earlier this week, Economics Minister Kuo Jyh-huei (郭智輝) said the ministry will take into account the impact on inflation resulting from electricity rate hikes, emphasizing the government is determined to keep the local consumer price index (CPI) from rising more than 2 percent, an alert level set by the central bank.

In the first two months of this year, Taiwan's CPI grew 2.12 percent, while the Directorate General of Budget, Accounting and Statistics forecast in late February that the country's inflation will hit 1.94 percent in 2025.

The Taipower internal report showed the upcoming rate hikes aim to allow the power supplier to sell electricity at a price closer to its costs. Taipower Chairman Tseng Wen-sheng (曾文生) had said he hoped the local power rate structure would be more reasonable, particularly for smaller households and business users.

If the MOEA's power rate review meeting approves the rate hike plan, about 13.60 million households and 910,000 small businesses will be affected, Taipower said.

It added that industrial users, regardless of whether they are high voltage users such as contract chipmaker Taiwan Semiconductor Manufacturing Co. and other companies, are expected to see their power expenses rise because of the rate hike.

Despite the electricity rate increases, Taipower said it is unlikely for the company to break even this year as it has to consider the impact of inflation on household users and the competitive edge of Taiwan's industries.