Sat, Oct 16, 1999 page17

• IPPs blame Taipower for shortages

  • By Tu Po-heng / STAFF REPORTER
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  Representatives of Independent power providers (IPPs) blamed the state-run Taiwan Power Co's (Taipower) (台電) stranglehold over transmission facilities for electricity supply problems in Northern Taiwan as revealed by an island-wide blackout on July 29 and power cuts following the devastating earthquake on Sept. 21.

  In a public hearing held yesterday, IPP company representatives said implementation of the Electric Utility Law was the key to encouraging necessary private sector investment in the power industry.

  Along with strong protests from environmental groups and opposition from local governments, the stagnant liberalization process has also hindered those who do business in this sector, the IPP representatives said.

  The electricity industry basically involves supplying power, transmission, and distribution, but the government has so far only opened the supply sector. The first two stages of electricity liberalization were introduced in 1995 and the third stage is slated to begin by the end of this year.

  Taipower is the sole electricity distributor and transmitter and is the only buyer of privately produced power. In a sense, Taipower is a referee and private suppliers are the players, the IPP representatives claimed.

  For example, power plants in the central and southern parts of Taiwan have to use Taipower's transmission system to transmit to the northern part of the island, where there is often a serious electricity shortfall. However, since Taipower's transmission capacity is only 1,500 megawatts, no matter how many private suppliers there are, they all must to share this 1,500 megawatts transmission capacity, reducing their profit margins, representatives said.

  "Because of the capacity limitation, even if we can provide over 1,500 megawatts to Taipower, it cannot transmit it to the northern part of the island," said Francis Leu (呂文芳), vice president of Chihui Power Corp. Therefore, he and several other industrial representatives urged Taipower to either enhance its transmission capacity or liberalize the transmission sector.

  "That's one way to solve the electricity shortfall in northern Taiwan," said Chen Ching-chih (陳清池), a manager at Ever Power IPP Co Ltd (長生電力). He added that it's very difficult to build a power plant in the north because of the difficulties in securing land there.

  According to Taipower, power supplies in the central and southern parts of the island are now sufficient, so there is no pressing need to build power plants in these areas.

  Power demand in the northern part of Taiwan, however, accounts for 45 percent of the nation's gross power consumption, but the area only contributes 20 percent of the nation's power supply.

  In addition, Chiahui's Leu said Taipower's control of power transmission coupled with state-run Chinese Petroleum Corp's (CPC) control of fuel supply, such as natural gas, have made it more difficult for the company to survive as their profit margins are squeezed by Taiwan's two dominant companies.

  Most independent power providers have decided to build hydroelectric power plants because of greenhouse emission restrictions.

  "We are in a situation where our fuel supplier is CPC, the island's sole natural gas distributor, and Taipower is the sole power distributor. We have little bargaining power," Leu said, adding that state-run companies have to meet certain profit requirements set by the government, making them reluctant to lower their prices in accordance with market conditions.

  Wang Lo-far (王塗發), head of department of economics at National Chung Hsing University supported private power suppliers' claims, saying that quick implementation of the Electricity Utility Law is the only way to solve these problems.

  "The government should accelerate its pace in enacting the law and liberalizing the market, as these problems would be solved under the influence of market mechanisms," Wang said.

  A new version of the Electricity Law has recently been sent to the Executive Yuan for review before being forwarded to the Legislative Yuan for ratification.

  Chen Chao-yih (陳昭義), secretary general of the Energy Commission under the Ministry of Economic Affairs (經濟部能源委員會) said, adding that the draft will be sent to the legislature by the end of this year.

  Even so, he is not optimistic that the law will pass anytime soon, since it took the Legislature two years to review the first version of the law, and then they rejected it.

  Chen said that power shortages are likely to continue for the next two years, as it will take Taipower this amount of time to repair transmission systems damaged in the quake.

  He added that the situation should begin to improve by 2003 after four private power plants start to supply power, and that by 2005 or 2006 the situation should be resolved.
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