Despite power rate hike, Taipower will see NT$410 billion in losses

Taipei, Sept. 20 (CNA) State-owned Taiwan Power Co. (Taipower) would still incur more than NT$410 billion (US$13.58 billion) in accumulated losses even though it has decided to raise electricity rates starting from October, according to the Ministry of Economic Affairs (MOEA).

Due to a surge in international fuel prices in recent years, Taipower has long had to absorb some of its production costs to assuage inflationary pressure. The power supplier has reported NT$417.9 billion in accumulated losses as of July.

Speaking with reporters, Vice Economics Minister Lai Chien-hsin (賴建信) said the power rate hike of 3.12 percent per kilowatt-hour (kWh) on average for residential users and small vendors is expected to help the company generate an additional NT$6.4 billion in revenue for one year, but that is unlikely to make up for the company's huge years-long losses.

On Friday, the Electricity Rate Review Committee, an independent panel of experts, approved Taipower's proposal to raise electricity tariffs by taking into account the company's large losses and a move by the Legislative Yuan not to pass a subsidy program for the power supplier. But industrial users will not be affected.

According to Taipower, the average residential electricity price is currently NT$2.77 per kWh, below the supply cost of NT$3.8 per kWh.

Lai said the MOEA has asked Taipower to cut operating costs, which could reduce expenses by almost NT$1.9 billion this year, while natural gas and coal prices still went beyond those recorded before the Russia-Ukraine war, putting pressure on production costs. He urged lawmakers to support Taipower's subsidy proposal to allow the company to reduce its financial burden.

In the first seven months of this year, Taipower posted NT$4.1 billion in profit, just a small drop compared to its huge aggregate losses.

In a statement issued on Friday, the Chinese National Association of Industry and Commerce, Taiwan, (CNAIC), raised concerns over inflationary pressure after the power rate hike, urging the government to come up with measures to mitigate the impact resulting from inflation.

The CNAIC said that although a price freeze for industrial users will protect Taiwan's competitive edge in the global market, consumers will face rising living costs and inflationary pressure, which could harm their purchasing power, particularly for low-income families.

The business group suggested that the government carefully map out its energy policies and push Taipower to improve its financial strength and efficiency, so that Taiwan can achieve energy and economic sustainability.

However, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said on Saturday that he expected the local consumer price index (CPI) would not be boosted significantly by the latest rate hike, adding that it was appropriate to raise power rates now as the current CPI growth has stabilized and global fuel prices have moderated.

After the latest power rate hike, the Cabinet said Taiwan's electricity still remains lower than that of neighboring countries.

Cabinet spokesperson Michelle Lee (李慧芝) said in a statement that after the increase, household users will have to pay NT$2.89 per kWh, compared with NT$3.96 in South Korea, NT$6.8 in Japan, and NT$7.73 in Singapore.