Cut in aid to Taipower could lead to electricity rate hikes: Cabinet

Taipei, July 12 (CNA) The removal of NT$100 billion (US$3.42 billion) in aid to financially troubled state-owned Taiwan Power Co. (Taipower) from a special bill passed by the Legislative Yuan on Friday could lead to a hike in electricity rates, which could raise inflation, according to the Executive Yuan.

After the passage of the bill, Executive Yuan spokesperson Michelle Lee (李慧芝) said in a statement that an electricity tariff review meeting of the Ministry of Economic Affairs (MOEA) may decide to approve a hike in power rates as Taipower failed to secure the aid.

Lee said a hike in power rates could push up inflation and impact consumers and the industrial sector.

Echoing Lee, Taipower said an electricity tariff review meeting has been scheduled for September and the company will report at that time its actual financial situation and seek aid from the government.

On Friday, lawmakers from the opposition Kuomintang (KMT), the biggest party in the Legislature, were able to successfully push for the removal of NT$100 billion in aid for Taipower from the special NT$545 billion package.

The special act will allow the government to use surplus tax revenue to invest in Taiwan's security infrastructure and provide relief to industries likely to be affected by U.S. tariffs.

Taipower said that due to a failure to secure the needed financial assistance, domestic power tariffs will be raised accordingly to make up for the losses suffered by the company.

According to the MOEA, Taipower's accumulated losses hit NT$422.9 billion as of the end of 2024, largely due to a surge in fuel costs. As the previous power tariff review meeting agreed not to hike rates in April, the MOEA said Taipower is expected to incur an additional NT$33.2 billion in losses in 2025.

Opposition lawmakers have repeatedly stated the large losses posted by Taipower resulted from the government's failed energy policies, including the phaseout of clean and more affordable nuclear power, and the purchase of renewable energy from the private sector at unreasonably high prices.

Paul Hsu (許舒博), head of the General Chamber of Commerce of the Republic of China, said a possible hike in power rates resulting from the removal of the NT$100 billion aid to Taipower could deal another blow to the local economy, which has come under pressure from uncertainties created by the U.S. tariff policies and a stronger Taiwan dollar against the U.S. dollar.

Hsu said higher electricity rates, along with tariffs imposed by the United States, are expected to raise production costs and lower the competitive edge of local industries, particularly old economy sectors.

The Chinese National Federation of Industries, another major Taiwanese business group, said before the review of the special bill on Friday, that the group and its counterparts had urged the Legislative Yuan to approve the NT$100 billion aid to Taipower by taking into account the power supplier's difficult financial conditions.

Lee said the government's proposed NT$100 billion aid to Taipower aimed to improve the company's financial structure, ease the pressure for higher electricity rates and growing inflation, and eventually protect the public's interests, the industrial sector, as well as the entire economy.

She said Taipower staffers have been working hard to fix power grid networks damaged by Typhoon Danas, which hit Taiwan earlier this week, so Premier Cho Jung-tai (卓榮泰) expressed regret about the failure to secure financial aid for the company, hoping its personnel will not be discouraged by the Legislative vote.

While removing the financial aid to Taipower, the newly passed bill includes NT$230 billion in cash handouts to Taiwanese citizens.

Lee said the handouts will prompt the government to raise debt, an inappropriate way to manage the country's finances, which will lead to the next generation shouldering the burden.